Salich Manufacturing Corporation has provided the following sales budget information:
Cash sales are normally 40% of total sales and the credit sales are expected to be collected in the month following the month of sale.The amount of cash expected to be received from customers in September is:

Question

Salich Manufacturing Corporation has provided the following sales budget information: 
Cash sales are normally 40% of total sales and the credit sales are expected to be collected in the month following the month of sale.The amount of cash expected to be received from customers in September is:

Quizplus · Accepted Answer

From the sales budget information, the total credit sales for September are $85,000. Since credit sales are expected to be collected in the following month, October, we do not include this in the cash expected to be received in September.

Cash sales are normally 40% of total sales, therefore cash expected to be received in September is:

$100,000 x 0.4 = $40,000

Adding to this, the expected collections on accounts receivable from August sales:

$40,000 + $17,000 = $57,000

Therefore, the answer is (C) $57,000.

Salich Manufacturing Corporation Has Provided the Following Sales Budget Information