Top Printing Company has credit sales of $500,000 in June, $700,000 in July, $850,000 in August, and $500,000 in September. It collects 50% of its credit sales in the month following the sale and 25% in each of the months thereafter. What is Top Printing's cash collection in September?

Question

Quizplus · Accepted Answer

Top Printing's cash collection in September is $725,000. This is because it collects 50% of its credit sales in the month following the sale, so it will collect 50% of the $850,000 in credit sales from August in September. It will also collect 25% of the $500,000 in credit sales from June and 25% of the $700,000 in credit sales from July, which totals $312,500. Therefore, its total cash collection in September is $725,000.

Top Printing Company Has Credit Sales of $500,000 in June