Starfish Industries' sales budget for the first quarter of the upcoming year shows budgeted sales of $325,000, $350,000, and $310,000 in January, February, and March, respectively.All sales are made on credit.The cash receipts budget for March shows total cash receipts equal to $296,780.Starfish grants a discount to customers who pay within 10 days of the invoice.Starfish collects 60% of sales within the discount period, 20% in the month of sale but outside the discount period, 15% in the month following sale and the remainder is uncollectible.What is the discount offered by Starfish, and what are the cash collections in March associated with March sales?
A)2%; $244,280
B)1.5%; $245,210
C)2%; $182,280
D)1.5%; $183,210

Question

Quizplus · Accepted Answer

The discount offered by Starfish is 2%. For March sales, 60% is collected within the discount period, so $310,000 * 60% = $186,000. With a 2% discount, the cash collected is $186,000 * 98% = $182,280.

Starfish Industries' Sales Budget for the First Quarter of the Upcoming