Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000.
Accounts receivable on December 31 were $45,000.
-Refer to the figure.What are the expected cash collections of Freedom Manufacturing Company for March?
A)$64,500
B)$69,600
C)$90,000
D)$114,600

Question

Quizplus · Accepted Answer

To calculate the expected cash collections for March, we need to look at the March column under the "Cash Received" section of the table. Adding up the cash received from customers in each category gives us:
$25,200 + $24,000 + $18,400 + $2,000 = $69,600
Therefore, the expected cash collections for March are $69,600. Answer choice B is the correct answer.

Freedom Manufacturing Company Needs to Know Its Anticipated Cash Inflows