The PDQ Company makes collections on credit sales according to the following schedule:
25% in month of sale
70% in month following sale
4% in second month following sale
1% uncollectible
The following sales have been budgeted:
$\begin{array}{|l|r|}
\hline \text { Month } & \text { Sales } \
\hline \text { April } & \$ 100,000 \
\hline \text { May } & 120,000 \
\hline \text { June } & 110,000 \
\hline
\end{array}$
What would be the cash collections in June?

Question

Quizplus · Accepted Answer

In June, the cash collections would include 25% of June sales, 70% of May sales, and 4% of April sales. Calculating each: June sales (25% of $110,000) = $27,500; May sales (70% of $120,000) = $84,000; April sales (4% of $100,000) = $4,000. Adding these together gives $27,500 + $84,000 + $4,000 = $115,500.

The PDQ Company Makes Collections on Credit Sales According to the Following