Parlee Company's sales are 30% in cash and 70% on credit.Sixty percent of the credit sales are collected in the month of sale,25% in the month following sale,and 12% in the second month following sale.The remainder are uncollectible.The following are budgeted sales data: Total cash receipts in April would be budgeted to be:

Question

Parlee Company's sales are 30% in cash and 70% on credit.Sixty percent of the credit sales are collected in the month of sale,25% in the month following sale,and 12% in the second month following sale.The remainder are uncollectible.The following are budgeted sales data:  Total cash receipts in April would be budgeted to be:

Quizplus · Accepted Answer

Total credit sales = $90,000 x 70% = $63,000
Amount collected in the month of sale = $63,000 x 60% = $37,800
Amount collected in the following month = $63,000 x 25% = $15,750
Amount collected in the second month following sale = $63,000 x 12% = $7,560
Total cash receipts in April = $27,230 + $37,800 + $15,750 + $7,560 = $88,340
Therefore, the best choice is B as it is the closest option to the calculated total cash receipts in April.

Parlee Company's Sales Are 30% in Cash and 70% on Credit.Sixty