Falcons Company expects a total of $10,000 in sales in May Of these, $4,000 sales are expected to be for cash.Collections are 50% in the month of sale, 40% in the month following the sale, and 5% two months following the sale.The remaining 5% is expected to be uncollectible.____ is the estimated cash collection in May from May sales.
A)$4,000
B)$10,000
C)$7,000
D)$5,000

Question

Quizplus · Accepted Answer

Out of the $10,000 total sales, only $4,000 are expected to be collected as cash in May. 
The remaining $6,000 will be collected based on the given percentages: 
- 50% ($3,000) will be collected in the month of sale (May) 
- 40% ($2,400) will be collected in the month following the sale (June) 
- 5% ($300) will be collected two months following the sale (July) 
Therefore, the estimated cash collection in May from May sales is $4,000 (cash sales) + $3,000 (50% of credit sales) = $7,000.

Falcons Company Expects a Total of $10,000 in Sales in May