A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: $$\begin{array} { l r }
\text { January } & \$ 360,000 \
\text { February } & 216,000 \
\text { March } & 540,000
\end{array}$$ The cash inflow in the month of March is expected to be

Question

A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: $$\begin{array} { l r } 
\text { January } & \$ 360,000 \
\text { February } & 216,000 \
\text { March } & 540,000
\end{array}$$ The cash inflow in the month of March is expected to be

Quizplus · Accepted Answer

60% of March sales are collected in March ($540,000 x 0.60 = $324,000). 30% of February sales are collected in March ($216,000 x 0.30 = $64,800). Total cash inflow in March is $324,000 + $64,800 = $388,800.

A Company's Past Experience Indicates That 60% of Its Credit January $360,000 February 216,000 March 540,000\begin{array} { l r } \text { January } & \$ 360,000 \\\text { February } & 216,000 \\\text { March } & 540,000\end{array} January February March ​$360,000216,000540,000​

A Company's Past Experience Indicates That 60% of Its Credit $\begin{array} { l r } \text { January } & \$ 360,000 \\\text { February } & 216,000 \\\text { March } & 540,000\end{array}$