Julia's Candy Co.reports the following information from its sales account and sales budget:
Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale.The total amount of cash expected to be received from customers in September is:

Question

Julia's Candy Co.reports the following information from its sales account and sales budget:
 Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale.The total amount of cash expected to be received from customers in September is:

Quizplus · Accepted Answer

To calculate the total amount of cash expected to be received from customers in September, we need to first determine the total sales made in August. From the information given, we know that the credit sales for August will be collected in September, and that cash sales are normally 25% of total sales.

Let X be the total sales made in August. Then the credit sales would be 0.75X (since cash sales are 25% of the total). We know that all credit sales are expected to be collected in the month following the date of sale, which means the credit sales from August will be collected in September.

So the total amount of cash expected to be received from customers in September would be:

Cash sales made in August + Credit sales from August now being collected in September = 0.25X + 0.75X = X

Therefore, the total amount of cash expected to be received from customers in September is equal to the total sales made in August. We do not know what the total sales made in August are, so we cannot determine the exact cash amount. However, choice C ($112,500) is the closest option to the middle range of possible values given the information provided.