The following sales budget has been prepared:
$\begin{array}{lll}\text { Month }&\text { Cash Sales }&\text { Credit Sales }\
\text { September } & \$ 167,000 & \$ 123,000 \
\text { October } & 225,000 & 180,000 \
\text { November } & 330,000 & 210,000 \
\text { December } & 135,000 & 190,000
\end{array}$
Collections of credit sales are 50% in the month of sale,40% in the month following sale,and 10% two months following sale.No uncollectible accounts are expected.What are the estimated cash collections in December?
A) $135,000
B) $197,000
C) $325,000
D) $332,000

Question

Quizplus · Accepted Answer

To calculate the estimated cash collections in December, we need to consider the cash sales in December and the collections from credit sales made in previous months based on the given percentages. For December, the cash collections include:- Cash sales in December: $135,000- 50% of December's credit sales: 0.5 * $190,000 = $95,000- 40% of November's credit sales: 0.4 * $210,000 = $84,000- 10% of October's credit sales: 0.1 * $180,000 = $18,000Adding these amounts gives us the total estimated cash collections in December: $135,000 + $95,000 + $84,000 + $18,000 = $332,000.

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