Freightcan Holders has provided the following extracts from their budget for the first quarter of the forthcoming year: $\begin{array}{|l|c|c|c|}
\hline& \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales }(30 \% \text { cash }) & \$ 500,000 & \$ 750,000 & \$ 1,000,000\\hline
\end{array}$ The company collects 60% of credit sales in the same month and the balance in the next month. Calculate the collections from the customers for the month of February.

Question

Freightcan Holders has provided the following extracts from their budget for the first quarter of the forthcoming year: $\begin{array}{|l|c|c|c|} 
\hline& \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales }(30 \% \text { cash }) & \$ 500,000 & \$ 750,000 & \$ 1,000,000\\hline
\end{array}$ The company collects 60% of credit sales in the same month and the balance in the next month. Calculate the collections from the customers for the month of February.

Quizplus · Accepted Answer

In February, cash sales are 30% of $750,000 = $225,000. Credit sales are 70% of $750,000 = $525,000. 60% of February's credit sales collected in February = $315,000. 40% of January's credit sales collected in February = 40% of $350,000 = $140,000. Total collections in February = $225,000 + $315,000 + $140,000 = $680,000.

Freightcan Holders Has Provided the Following Extracts from Their Budget