Camellia, a merchandising company, has provided the following extracts from their budget for the first quarter of the forthcoming year: $$\begin{array} { | l | l | l | c | }
\hline & \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales } ( 25 \% \text { cash } ) & \$ 500,000 & \$ 600,000 & \$ 800,000 \
\hline
\end{array}$$ The company collects 70% 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

Camellia, a merchandising company, has provided the following extracts from their budget for the first quarter of the forthcoming year: $$\begin{array} { | l | l | l | c | } 
\hline & \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales } ( 25 \% \text { cash } ) & \$ 500,000 & \$ 600,000 & \$ 800,000 \
\hline
\end{array}$$ The company collects 70% 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

Collections for February include 25% of February sales in cash, 70% of February's credit sales in the same month, and the remaining 30% of January's credit sales. February's cash sales are $600,000 * 25% = $150,000. February's credit sales are $600,000 * 75% = $450,000, with 70% collected in February, equaling $315,000. The remaining 30% of January's credit sales ($500,000 * 75% * 30% = $112,500) are also collected in February. Adding these amounts gives $150,000 + $315,000 + $112,500 = $577,500.

Camellia, a Merchandising Company, Has Provided the Following Extracts from Their