As of January 1 of the current year, Grackle Company had accounts receivable of $50,000. The sales for January, February, and March were $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. The total cash collected (both from accounts receivable and cash sales) in the month of February is
A)$129,600
B)$62,400
C)$133,600
D)$91,200

Question

Quizplus · Accepted Answer

To calculate the total cash collected in February, we need to consider cash sales in February, collections from February's credit sales, and collections from January's credit sales.1. **Cash Sales in February**: 20% of February sales are for cash.    - $140,000 * 20% = $28,0002. **Collections from February's Credit Sales**: 60% of February's credit sales (80% of total sales) are collected in the same month.   - February's credit sales = $140,000 * 80% = $112,000   - Collected in February = $112,000 * 60% = $67,2003. **Collections from January's Credit Sales**: The remaining 40% of January's credit sales are collected in February.   - January's credit sales = $120,000 * 80% = $96,000   - Collected in February (from January) = $96,000 * 40% = $38,400Adding these amounts gives the total cash collected in February:- $28,000 (cash sales) + $67,200 (collections from February's credit sales) + $38,400 (collections from January's credit sales) = $133,600

As of January 1 of the Current Year, Grackle Company