Quattro 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

For April sales of $60,000, only 30% or $18,000 would be collected in April. For May, 60% or $48,000 would be collected and for June, 10% or $7,000 would be collected. 
For May sales of $80,000, 30% or $24,000 would be collected in May, 60% or $48,000 would be collected in June, and 10% or $8,000 would be collected in July. 
For June sales of $70,000, 30% or $21,000 would be collected in June, 60% or $42,000 would be collected in July, and 10% or $7,000 would be collected in August. 
Adding up all the collections, we get: $18,000 + $48,000 + $7,000 + $24,000 + $48,000 + $8,000 + $21,000 + $42,000 + $7,000 = $153,000. Therefore, the answer is C.

Quattro Began Operations in April of This Year