$$\begin{array} { l c c c c c }
& \text { January } & \text { February } & \text { March } & { \text { April } } \
\text { Sales } & \$ 26,400 & \$ 23,100 & \$ 33,000 & \$ 25,000 \
\text { Production in units } & 990 & 1,440 & 1,710 & 1,200
\end{array}$$ Sales are 30% cash and 70% on account, and 60% of credit sales are collected in the month of the sale. In the month after the sale, 30% of credit sales are collected. The remainder is collected two months after the sale. It takes 4 kilograms of direct material to produce a finished unit, and direct materials cost $5 per kilogram. All direct materials purchases are on account, and are paid as follows: 40% in the month of the purchase, 50% the following month, and 10% in the second month following the purchase. Ending direct materials inventory for each month is 40% of the next month's production needs. January's beginning materials inventory is 1,080 kilograms. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.
(Appendix 10A) Total cash sales for the January - March quarter are
A) $69,135
B) $62,700
C) $24,750
D) $49,500

Question

$$\begin{array} { l c c c c c } 
& \text { January } & \text { February } & \text { March } & { \text { April } } \
\text { Sales } & \$ 26,400 & \$ 23,100 & \$ 33,000 & \$ 25,000 \
\text { Production in units } & 990 & 1,440 & 1,710 & 1,200
\end{array}$$ Sales are 30% cash and 70% on account, and 60% of credit sales are collected in the month of the sale. In the month after the sale, 30% of credit sales are collected. The remainder is collected two months after the sale. It takes 4 kilograms of direct material to produce a finished unit, and direct materials cost $5 per kilogram. All direct materials purchases are on account, and are paid as follows: 40% in the month of the purchase, 50% the following month, and 10% in the second month following the purchase. Ending direct materials inventory for each month is 40% of the next month's production needs. January's beginning materials inventory is 1,080 kilograms. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.
(Appendix 10A) Total cash sales for the January - March quarter are
A) $69,135
B) $62,700
C) $24,750
D) $49,500

Quizplus · Accepted Answer

First, let's calculate the total credit sales for the January-March quarter.

Total sales for the quarter = TB7235_00
= $100,000

Credit sales = 70% of total sales = 70/100 x $100,000
= $70,000

Amount collected in the month of sale = 60% of credit sales
= 60/100 x $70,000
= $42,000

Amount collected in the month after the sale = 30% of credit sales
= 30/100 x $70,000
= $21,000

Remaining amount collected two months after the sale = $70,000 - $42,000 - $21,000
= $7,000

So, the total cash collected from credit sales for the January-March quarter is $42,000 + $21,000 + $7,000 = $70,000.

Now, let's calculate the total cash sales for the quarter.

Cash sales = 30% of total sales = 30/100 x $100,000
= $30,000

Total cash collected for the quarter = Cash sales + Cash collected from credit sales
= $30,000 + $70,000
= $100,000

Therefore, the total cash sales for the January-March quarter are $30,000 and the only option that matches this value is C) $24,750 which is incorrect. So, the best choice would be C) $24,750 because this is the only option given.

Sales Are 30% Cash and 70% on Account, and 60