Hatfield Company has the following budgeted credit sales for the last four months of the year -September, $13 000; October, $19 000; November $20 000; December, $24 000. Experience has shown that payment for the credit sales is received as follows: 10% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 10% uncollectible. How much cash can Hatfield Company expect to collect in November as a result of credit sales?

Question

Quizplus · Accepted Answer

In November, Hatfield Company will collect 10% of November sales ($20,000 * 10% = $2,000), 60% of October sales ($19,000 * 60% = $11,400), and 20% of September sales ($13,000 * 20% = $2,600). Total collection in November = $2,000 + $11,400 + $2,600 = $16,000.

Hatfield Company Has the Following Budgeted Credit Sales for the Last