London Manufacturing Company expects the following sales in January,February,and March: The controller has determined that the company collects credit sales as follows: 60% in the month of sale,30% in the first month after sale,5% in the second month after sale,and 5% is expected to be uncollectible.How much cash will be collected from customers in March?

Question

London Manufacturing Company expects the following sales in January,February,and March:  The controller has determined that the company collects credit sales as follows: 60% in the month of sale,30% in the first month after sale,5% in the second month after sale,and 5% is expected to be uncollectible.How much cash will be collected from customers in March?

Quizplus · Accepted Answer

To determine the cash collected in March, we need to first calculate the credit sales for January, February, and March.

January credit sales: 50% x $320,000 = $160,000 
February credit sales: 30% x $320,000 = $96,000 
March credit sales: 20% x $320,000 = $64,000

Total credit sales for the three months: $320,000

Now, we need to determine how much of these credit sales will be collected in March.

60% of January credit sales will be collected in January = $96,000 
30% of January credit sales will be collected in February = $48,000 
5% of January credit sales will be collected in March = $8,000

60% of February credit sales will be collected in February = $57,600 
30% of February credit sales will be collected in March = $28,800 
5% of February credit sales will be collected in April = $4,800

60% of March credit sales will be collected in March = $38,400 
30% of March credit sales will be collected in April = $19,200 
5% of March credit sales will be uncollectible = $3,200

Total cash collected in March: $8,000 + $57,600 + $38,400 = $104,000 
Plus, we need to add the 30% of February credit sales that will be collected in March: $28,800

So, the total cash collected in March is: $104,000 + $28,800 = $132,800

However, we also need to subtract the 5% of March credit sales that will be uncollectible: $3,200

Therefore, the final answer is: $132,800 - $3,200 = $129,600

None of the given answer choices match the final answer after calculations.

London Manufacturing Company Expects the Following Sales in January,February,and March