Downstairs Company has the following sales budget for the last six months of 2010:
$\begin{array}{ll}
\text { July } & \$ 100,000 \
\text { August } & 80,000 \
\text { September } & 110,000 \
\text { October } & 80,000 \
\text { November } & 100,000 \
\text { December } & 94,000
\end{array}$
Historically,the cash collection of sales has been as follows:
65% of sales collected in month of sale
25% of sales collected in month following sale
8% of sales collected in second month following sale
2% of sales uncollectible
What are the expected cash collections of sales in October?

Question

Quizplus · Accepted Answer

To calculate the expected cash collections in October, we consider the sales from August, September, and October, applying the historical collection percentages:- 65% of October sales: $0.65 \times \$80,000 = \$52,000$- 25% of September sales: $0.25 \times \$110,000 = \$27,500$- 8% of August sales: $0.08 \times \$80,000 = \$6,400$Adding these amounts gives the total expected cash collections for October: $ \$52,000 + \$27,500 + \$6,400 = \$85,900$.

Downstairs Company Has the Following Sales Budget for the Last