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: $$\begin{array} { l r }
\text { April } & \$ 250,000 \
\text { May } & 150,000 \
\text { June } & 375,000
\end{array}$$ The cash inflow in the month of June 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: $$\begin{array} { l r } 
\text { April } & \$ 250,000 \
\text { May } & 150,000 \
\text { June } & 375,000
\end{array}$$ The cash inflow in the month of June is expected to be

Quizplus · Accepted Answer

60% of June sales are collected in June ($375,000 x 0.60 = $225,000). 30% of May sales are collected in June ($150,000 x 0.30 = $45,000). 5% of April sales are collected in June ($250,000 x 0.05 = $12,500). Total cash inflow in June is $225,000 + $45,000 + $12,500 = $282,500.

A Company's Past Experience Indicates That 60% of Its Credit April $250,000 May 150,000 June 375,000\begin{array} { l r } \text { April } & \$ 250,000 \\\text { May } & 150,000 \\\text { June } & 375,000\end{array} April May June ​$250,000150,000375,000​

A Company's Past Experience Indicates That 60% of Its Credit $\begin{array} { l r } \text { April } & \$ 250,000 \\\text { May } & 150,000 \\\text { June } & 375,000\end{array}$