Camellia,a merchandising company,has provided the following extracts from their budget for the first quarter of the forthcoming year: $$\begin{array} { | l | c | c | c | }
\hline & \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales (20\% cash) } & \$ 500,000 & \$ 750,000 & \$ 1,000,000 \
\hline
\end{array}$$ 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: $$\begin{array} { | l | c | c | c | } 
\hline & \text { Jan } & \text { Feb } & \text { March } \
\hline \text { Sales (20\% cash) } & \$ 500,000 & \$ 750,000 & \$ 1,000,000 \
\hline
\end{array}$$ 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 20% 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 sales are $750,000, with 20% ($150,000) in cash. The remaining 80% ($600,000) is credit, with 70% ($420,000) collected in February and 30% of January's credit sales ($400,000 * 30% = $120,000) also collected in February. Total collections for February = $150,000 (cash sales) + $420,000 (70% of February's credit sales) + $120,000 (30% of January's credit sales) = $690,000.

Camellia,a Merchandising Company,has Provided the Following Extracts from Their Budget