Junior Snacks reports the following information from its sales budget: All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale. The total amount of cash expected to be received from customers in November is:
A) $146,200.
B) $85,800.
C) $151,000.
D) $236,800.
E) $60,400.

Question

Junior Snacks reports the following information from its sales budget:  All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale. The total amount of cash expected to be received from customers in November is:
A) $146,200. 
B) $85,800. 
C) $151,000. 
D) $236,800. 
E) $60,400.

Quizplus · Accepted Answer

To calculate the cash expected to be received in November, we need to look at the sales made in September and October.

Sales made in September = $120,000 x 20% = $24,000 
40% of September sales collected in September = $24,000 x 40% = $9,600 
60% of September sales collected in October = $24,000 x 60% = $14,400

Sales made in October = $180,000 x 30% = $54,000 
40% of October sales collected in October = $54,000 x 40% = $21,600 
60% of October sales collected in November = $54,000 x 60% = $32,400

Total cash expected to be received in November = $9,600 + $32,400 + $120,000 (sales made in November) = $146,000.

Therefore, the best choice is A.

Junior Snacks Reports the Following Information from Its Sales Budget