The following sales budget has been prepared:
Collections are 50 percent in the month of sale, 40 percent in the month following the sale, and 10 percent two months following the sale. No uncollectible accounts are anticipated.
-The total cash received in October on October sales will be

Question

The following sales budget has been prepared:
  Collections are 50 percent in the month of sale, 40 percent in the month following the sale, and 10 percent two months following the sale. No uncollectible accounts are anticipated.
-The total cash received in October on October sales will be

Quizplus · Accepted Answer

October sales were $590,000. 80% of the sales are collected in the month of sale. So, the total cash received in October on October sales will be 80% of $590,000, which is $472,000. However, the company has a 10% discount for early payment. So, the total cash received in October on October sales will be $472,000 - 10% of $472,000, which is $430,000.

The Following Sales Budget Has Been Prepared