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 August?

Question

Quizplus · Accepted Answer

April sales of $30,000: 10% cash = $3,000; 75% collected in May = $22,500; 17% collected in June = $5,100; 6% collected in July = $1,800; 2% uncollectible = $600.May sales of $34,000: 10% cash = $3,400; 75% collected in June = $25,500; 17% collected in July = $5,780; 6% collected in August = $2,040; 2% uncollectible = $680.June sales of $40,000: 10% cash = $4,000; 75% collected in July = $30,000; 17% collected in August = $6,800; 6% collected in September = $2,400; 2% uncollectible = $800.July sales of $42,000: 10% cash = $4,200; 75% collected in August = $31,500; 17% collected in September = $7,140; 6% collected in October = $2,520; 2% uncollectible = $840.August sales of $38,000: 10% cash = $3,800; 75% collected in September = $28,500; 17% collected in October = $6,460; 6% collected in November = $2,280; 2% uncollectible = $760.Total cash to be collected in August = $3,800 + $6,800 + $31,500 + $2,040 = $44,140.

The Model Company Is to Begin Operations in April