The Model Company is to begin operations in April. It has budgeted April sales of $30,000, May sales of $34,000, June sales of $40,000, July sales of $42,000, and August sales of $38,000. Note that 10% of each month's sales is expected to represent cash sales; 75% of the balance is expected to be collected in the month following the sale, 17% the second month, 6% the third month, and the balance is expected to be uncollectible.
What is the amount of cash to be collected in the month of July?

Question

Quizplus · Accepted Answer

In July, cash collections include 10% of July sales ($4,200), 75% of June's credit sales ($27,000), and 17% of May's credit sales ($5,782). Total = $4,200 + $27,000 + $5,782 = $38,982.

The Model Company Is to Begin Operations in April