Fit and Tight Plumbing Supply Company makes all sales on a credit basis. The company has forecast sales for the upcoming quarter as follows:
Experience has shown that 60% of a month's sales are collected in the month the sales take place, 25% are collected in the month that follows the sale, and the final 15% is collected in the second month following sale. Bad debts are negligible and are ignored for budgeting purposes. May and June actual sales were $45,000 and $50,000, respectively. What amount of cash receipts from sales will the company budget for August?
A) $27,000
B) $44,500
C) $43,250
D) $45,000

Question

Fit and Tight Plumbing Supply Company makes all sales on a credit basis. The company has forecast sales for the upcoming quarter as follows:
 Experience has shown that 60% of a month's sales are collected in the month the sales take place, 25% are collected in the month that follows the sale, and the final 15% is collected in the second month following sale. Bad debts are negligible and are ignored for budgeting purposes. May and June actual sales were $45,000 and $50,000, respectively. What amount of cash receipts from sales will the company budget for August?
A) $27,000 
B) $44,500 
C) $43,250 
D) $45,000

Quizplus · Accepted Answer

The Answer of Fit and Tight Plumbing Supply Company makes all sales on a credit basis. The company has forecast sales for the upcoming quarter as follows:
 Experience has shown that 60% of a month's sales are collected in the month the sales take place, 25% are collected in the month that follows the sale, and the final 15% is collected in the second month following sale. Bad debts are negligible and are ignored for budgeting purposes. May and June actual sales were $45,000 and $50,000, respectively. What amount of cash receipts from sales will the company budget for August?
A) $27,000 
B) $44,500 
C) $43,250 
D) $45,000

Fit and Tight Plumbing Supply Company Makes All Sales on a Credit