The Little Toy Company will start doing business in February and needs to forecast its total cash receipts for April.Its projected total sales are $15,000,$20,000,and $25,000 for February,March and April,respectively.Little Toy anticipates that 50% of sales will be for cash and 1/2 of credit sales will be collected the month after sale with the remained being collected 2 months after the sale.What the forecasted cash receipts to Little Toy in April?

Question

Quizplus · Accepted Answer

April cash sales: 25,000 ´ .5 = 12,500
April collections for March sales: 20,000 ´ .5 ´ .5 = 5,000
April collections for Feb sales: 15,000 ´ .5 ´ .5 = 3,750
April total collections: 12,500 + 5,000 + 3,750 = 21,250

The Little Toy Company Will Start Doing Business in February