A firm has actual sales in November of $1,000 and projected sales in December and January of$3,000 and $4,000, respectively. The firm makes 10 percent of its sales in cash, collects 40 percent ofits sales one month following the sale, and collects the balance two months following the sale. The firm's total expected cash receipts in January
A) are $2,100.
B) are $1,900.
C) are $700.
D) cannot be determined with the information provided.

Question

Quizplus · Accepted Answer

In January, the firm will collect 10% of January sales ($4,000 * 10% = $400), 40% of December sales ($3,000 * 40% = $1,200), and 50% of November sales ($1,000 * 50% = $500). Total cash receipts in January = $400 + $1,200 + $500 = $2,100.

A Firm Has Actual Sales in November of $1,000 and Projected