Falcons Company expects May sales to be $10,000.Approximately 40% of sales are cash sales.Collection of credit sales are 50% in the month of sale,40% in the month following sale and 5% two months following sale.The remaining 5% is uncollectible.________ is the expected cash collection in May from May sales.

Question

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Out of the total sales of $10,000, 40% are cash sales, which results in $4,000 cash collection in May. For credit sales, 50% are collected in the month of sale, which amounts to $3,000. Additionally, 40% of credit sales are collected in the following month (June), which amounts to $2,400. 5% of credit sales are collected in the second month after the sale (July), which amounts to $300. 5% of credit sales are uncollectible, which amounts to $300. Thus, the expected cash collection in May from May sales is $7,000 ($4,000 + $3,000).

Falcons Company Expects May Sales to Be $10,000