Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
Credit sales are collected:
40% in the month of the sale
60% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs.
-The expected cash collections for August is closest to:

Question

Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
   Credit sales are collected:
40% in the month of the sale
60% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs.
-The expected cash collections for August is closest to:

Quizplus · Accepted Answer

The expected cash collections for August are computed as follows:
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Sevenbergen Corporation Makes One Product and Has Provided the Following