Gallonte Inc. began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale.
- If sales for April, May, and June were $60,000, $80,000, and $70,000, respectively, what were the firm's budgeted collections for the quarter?

Question

Quizplus · Accepted Answer

The budgeted collections for the quarter are calculated as follows:  - April collections: 30% of $60,000 = $18,000  - May collections: 60% of $60,000 + 30% of $80,000 = $36,000 + $24,000 = $60,000  - June collections: 10% of $60,000 + 60% of $80,000 + 30% of $70,000 = $6,000 + $48,000 + $21,000 = $75,000  Total collections for the quarter = $18,000 + $60,000 + $75,000 = $153,000.