Sioux Corporation is estimating the following sales for the first four months of next year: Sales are normally collected 60% in the month of sale and 40% in the month following the sale. Based on this information, how much cash should Sioux expect to collect during the month of April?

Question

Sioux Corporation is estimating the following sales for the first four months of next year:  Sales are normally collected 60% in the month of sale and 40% in the month following the sale. Based on this information, how much cash should Sioux expect to collect during the month of April?

Quizplus · Accepted Answer

To determine the cash collected in April, we need to calculate the sales that are due from March and April:

Sales due from March = $900,000 x 40% = $360,000
Sales due from April = $1,100,000 x 60% = $660,000

Total cash expected to be collected in April = Sales due from March + Sales due from April = $360,000 + $660,000 = $1,020,000

Therefore, the correct answer is D) $358,000.

Sioux Corporation Is Estimating the Following Sales for the First