Santelle Company expects August sales to be $30,000.Approximately 40% of sales are cash sales.Collection of credit sales are 50% in the month of sale,40% in the month following sale and 5% two months following sale.The remaining 5% is uncollectible.________ is the expected cash collection in August from August sales.
A) $9,000
B) $12,000
C) $21,000
D) $36,000

Question

Quizplus · Accepted Answer

Out of the total $30,000 sales in August, 40% ($12,000) are cash sales. For credit sales, 50% will be collected in August (50% of $18,000 = $9,000). The remaining credit sales of $9,000 will be collected as follows: 40% in the following month ($3,600), 5% two months following sale ($450), and 5% is uncollectible ($450). Therefore, the total expected cash collection in August from August sales is $12,000 (cash sales) + $9,000 (50% of credit sales collected in August) = $21,000.

Santelle Company Expects August Sales to Be $30,000