Boylan Inc. has projected the following sales information for the first quarter of 2013: Credit sales are collected over a two-month period, with 55 percent collected in the month of sale and 45 percent collected in the month following sale.
Total cash collections for March are:
A) $55,900
B) $93,650
C) $70,250
D) $95,900

Question

Boylan Inc. has projected the following sales information for the first quarter of 2013:  Credit sales are collected over a two-month period, with 55 percent collected in the month of sale and 45 percent collected in the month following sale.
Total cash collections for March are:
A) $55,900 
B) $93,650 
C) $70,250 
D) $95,900

Quizplus · Accepted Answer

To calculate the total cash collections for March, we need to first determine the credit sales for January and February.

Credit sales for January = $110,000 
Credit sales for February = $125,000

55% of January credit sales are collected in March: 
$110,000 x 0.55 = $60,500

45% of January credit sales are collected in April: 
$110,000 x 0.45 = $49,500

55% of February credit sales are collected in March: 
$125,000 x 0.55 = $68,750

45% of February credit sales are collected in April: 
$125,000 x 0.45 = $56,250

Total cash collections for March: 
$60,500 + $68,750 = $129,250

Therefore, the closest answer choice is D) $95,900.