Kam Department Store reported the following information for 2016:
All sales are on credit.
- Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
How much cash will Kam receive in November?

Question

Quizplus · Accepted Answer

To determine the amount of cash Kam will receive in November, we need to look at the sales made in September and October, as 50% of these sales will be collected in November.

Total sales made in September = F1F1F1S1
Total sales made in October = F1F1F10

Using the given information, we can determine the following:

Amount to be collected in November from September sales = 50% of F1F1F1S1 = F1F1F1S1/2
Amount to be collected in November from October sales = 50% of F1F1F10 = F1F1F10/2

Therefore, the total cash Kam will receive in November is:
F1F1F1S1/2 + F1F1F10/2 = F1F1F110/2 = $1,200,000. Answer: C.

Kam Department Store Reported the Following Information for 2016