As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March were as follows: $120,000, $140,000 and $150,000. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of February?
A) $129,600
B) $62,400
C) $133,600
D) $91,200

Question

Quizplus · Accepted Answer

The credit sales in January are $96,000 [($120,000 x 80%)], out of which 60% ($57,600) is collected in January and 40% ($38,400) is collected in February. The same procedure is followed for February and March sales.

Therefore, the cash collected in February will be:
- 20% of February sales = $28,000
- 60% of January credit sales = $57,600
- 40% of February credit sales = $56,000 [($140,000 x 80%) x 40%]
- Total cash collected = $28,000 + $57,600 + $56,000 = $141,600
However, we need to subtract the accounts receivable balance at the beginning of the year ($50,000) since that was not collected in February:
$141,600 - $50,000 = $91,600
Therefore, the answer is C) $133,600.

As of January 1 of the Current Year, the Grackle