Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 30% in the month following the sale. The cash collections in October are:
A) $320,000
B) $248,000
C) $304,250
D) $382,500

Question

Quizplus · Accepted Answer

First, we need to determine how much of the total sales for October will be collected in cash.

$320,000 x 25% = $80,000 (cash sales)

To determine the cash collections for sales on account, we need to calculate the amount expected to be collected in October and the amount expected to be collected in November.

For sales on account, 70% is expected to be collected in the month of the sale:

$320,000 x 70% = $224,000 (collections in October)

30% is expected to be collected in the following month (November):

$320,000 x 30% = $96,000 (collections in November)

Now, we can calculate the total cash collections for October:

Cash sales + Collections for sales on account in October = Total collections in October

$80,000 + $224,000 = $304,000

Therefore, the answer is C) $304,250.

Dove Corporation Began Its Operations on September 1 of the Current