Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 2

Royal Cigar Company is preparing a budget for cash collections. Its sales for November and December are estimated as $90,000 and $100,000 respectively. Past practice indicates that sales in any given month are collected as follows: month of sale, 75 percent; month following the month of sale, 20 percent; uncollectible accounts, 5 percent. The company allows a 2 percent discount for cash collections in the month of sale. What is the net cash estimated to be collected in December