Clooney Company has the following expected pattern of collections on credit sales: 70 percent collected in the month of sale,15 percent in the month after the month of sale,and 14 percent in the second month after the month of sale.The remaining 1 percent is never collected.
At the end of May,Clooney Company has the following accounts receivable balances:
From Apil sales $21,00000
From May sales 48,000
Clooney's expected sales for June are $150,000.How much cash will Clooney Company expect to collect in June?

Question

Clooney Company has the following expected pattern of collections on credit sales: 70 percent collected in the month of sale,15 percent in the month after the month of sale,and 14 percent in the second month after the month of sale.The remaining 1 percent is never collected.
At the end of May,Clooney Company has the following accounts receivable balances:
From Apil sales              $21,00000
From May sales              48,000
Clooney's expected sales for June are $150,000.How much cash will Clooney Company expect to collect in June?

Quizplus · Accepted Answer

In June, Clooney Company expects to collect cash from sales in April, May, and June. From April sales, it will collect the remaining 14%, which is $21,000 * 14% = $2,940. From May sales, it will collect 70% + 15%, but since 70% was likely collected in May, we focus on the 15% for June, which is $48,000 * 15% = $7,200. From June sales, it will collect 70%, which is $150,000 * 70% = $105,000. Adding these amounts gives $2,940 + $7,200 + $105,000 = $115,140. However, the correct calculation for June collections should include 70% of June sales, 15% of May sales, and 14% of April sales correctly, which seems to have been miscalculated in the provided options and explanation. Therefore, the correct approach is to reassess the calculation based on the given percentages and sales figures.

Clooney Company Has the Following Expected Pattern of Collections on Credit