Justin Company's budget includes the following credit sales for the current year: September,$25,000;October,$36,000;November,$30,000;December,$32,000.Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale,60% in the first month after sale,20% in the second month after sale,and 5% is uncollectible.How much cash can Justin Company expect to collect in November as a result of current and past credit sales?

Question

Quizplus · Accepted Answer

To calculate the cash expected to be collected in November, we need to determine how much of each month's credit sales will be collected during that month.

For September's credit sales:
- 15% will be collected in September = $3,750
- 60% will be collected in October = $15,000
- 20% will be collected in November = $5,000
- 5% is uncollectible = $1,250

For October's credit sales:
- 15% will be collected in October = $5,400
- 60% will be collected in November = $21,600
- 20% will be collected in December = $7,200
- 5% is uncollectible = $1,800

For November's credit sales:
- 15% will be collected in November = $4,500
- 60% will be collected in December = $18,000
- 20% will be collected in January = $6,000
- 5% is uncollectible = $1,500

For December's credit sales:
- 15% will be collected in December = $4,800
- 60% will be collected in January = $19,200
- 20% will be collected in February = $6,400
- 5% is uncollectible = $1,600

Therefore, the cash expected to be collected in November from current and past credit sales is:

$5,000 (from September) + $21,600 (from October) + $4,500 (from November) = $31,100.

Therefore, the correct answer is D.

Justin Company's Budget Includes the Following Credit Sales for the Current