The following credit sales are budgeted by Peckman Company: The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April is
A) $185,160.
B) $168,000.
C) $180,000.
D) $176,400.

Question

The following credit sales are budgeted by Peckman Company:  The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April is
A) $185,160. 
B) $168,000. 
C) $180,000. 
D) $176,400.

Quizplus · Accepted Answer

Step 1: Calculate the total credit sales for April 
$200,000 + $250,000 + $300,000 = $750,000

Step 2: Calculate the expected cash collections for April 
70% of $750,000 = $525,000 
20% of $750,000 = $150,000 
8% of $750,000 = $60,000 
Total expected cash collections for April = $735,000

Therefore, the anticipated cash inflow for the month of April is $180,000 (70% of $200,000) + $150,000 (20% of $250,000) + $60,000 (8% of $300,000) = $390,000.

The Following Credit Sales Are Budgeted by Peckman Company