Wright's sales budget for the third quarter of the upcoming year shows budgeted sales of $465,000, $525,000, and $487,500 in July, August, and September, respectively.All sales are made on credit.The cash receipts budget for September shows total cash receipts equal to $459,975.Wright grants a discount to customers who pay within 10 days of the invoice.Wright 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 Wright, and what are the cash collections in September associated with September sales?
A)2%; $477,750
B)2%; $384,150
C)3%; $283,725
D)3%; $381,225

Question

Quizplus · Accepted Answer

The discount offered by Wright is 3%. For September sales of $487,500, 60% is collected within the discount period, which is $292,500. With a 3% discount, the cash collected is $292,500 - ($292,500 * 0.03) = $283,725. Additionally, 20% of September sales are collected in the month of sale but outside the discount period, which is $97,500. Therefore, the total cash collections in September associated with September sales are $283,725 + $97,500 = $381,225.

Wright's Sales Budget for the Third Quarter of the Upcoming