Avery Manufacturing has the following sales budgets for the fourth quarter. The accounting manager has analyzed cash collections and determined that credit sales are collected 70% in the month of sale,20% in the month following the sale,and 10% in the 2^nd month following sale.How much cash will Avery collect in December? A)$1,154,790 B)$1,178,080 C)$898,990 D)$1,205,600

Question

Quizplus · Accepted Answer

To calculate the cash collection for December, we need to find the credit sales for October and November, which are $1,322,000 and $1,539,200, respectively.

For October sales, the cash collected in October would be 70%, which is $925,400. The cash collected in November would be 20%, which is $264,400. The cash collected in December would be 10%, which is $132,200.

For November sales, the cash collected in November would be 70%, which is $1,077,440. The cash collected in December would be 20%, which is $307,840. The cash collected in January would be 10%, which is $153,920.

Therefore, the total cash collection for December would be $132,200 (from October sales) + $307,840 (from November sales) = $440,040.

However, we need to add the cash balance from November, which is $738,040.

Therefore, the total cash collection in December would be $1,178,080, which is option B.

Avery Manufacturing Has the Following Sales Budgets for the Fourth