Benton Company's sales budget shows the following expected total sales: The company expects 80% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off. The total cash receipts during April would be:

Question

Benton Company's sales budget shows the following expected total sales:  The company expects 80% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off. The total cash receipts during April would be:

Quizplus · Accepted Answer

Cash receipts during April from sales in March and April = (March sales × Percent credit sales × Percent collected in month following month of sale) + (April sales × Percent credit sales × Percent collected in month of sale) + (April sales × Percent cash sales)
Cash receipts during April from sales in March and April = [$35,000 × 80% × 72%] + ($40,000 × 80% × 25%) + [$40,000 × (100% - 80%)] = $20,160 + $8,000 + $8,000 = $36,160

Benton Company's Sales Budget Shows the Following Expected Total Sales