Freightcan Holders has provided the following extracts from their budget for the first quarter of the forthcoming year: $$\begin{array} { | l | c | c | c | }
\hline & \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales } ( 30 \% \text { cash } ) & \$ 500,000 & \$ 750,000 & \$ 1,000,000 \
\hline
\end{array}$$ The company collects 60% of credit sales in the same month and the balance in the next month. Calculate the collections from the customers for the month of February.

Question

Freightcan Holders has provided the following extracts from their budget for the first quarter of the forthcoming year: $$\begin{array} { | l | c | c | c | } 
\hline & \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales } ( 30 \% \text { cash } ) & \$ 500,000 & \$ 750,000 & \$ 1,000,000 \
\hline
\end{array}$$ The company collects 60% of credit sales in the same month and the balance in the next month. Calculate the collections from the customers for the month of February.

Quizplus · Accepted Answer

Total credit sales in February = $750,000 x 70% = $525,000

Amount collected in February = $525,000 x 60% = $315,000

Amount collected in March = $525,000 x 40% = $210,000

Total collections in February = $315,000 + $210,000 = $525,000

However, the question specifically asks for collections from customers in February, so we only consider the amount collected from credit sales in February, which is $315,000 x 60% = $189,000.

Therefore, the correct answer is $189,000 + $491,000 (from cash sales) = $680,000.

Freightcan Holders Has Provided the Following Extracts from Their Budget