A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible. Projected sales for December, January, and February are $60,000, $85,000, and $95,000, respectively. The February expected cash receipts from all current and prior credit sales is:

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December sales on credit: $60,000 x 80% = $48,000January sales on credit: $85,000 x 80% = $68,000February sales on credit: $95,000 x 80% = $76,000Collections on December credit sales:In December: $48,000 x 20% = $9,600In January: $48,000 x 50% = $24,000In February: $48,000 x 25% = $12,000Collections on January credit sales:In January: $68,000 x 20% = $13,600In February: $68,000 x 50% = $34,000In March: $68,000 x 25% = $17,000Collections on February credit sales:In February: $76,000 x 20% = $15,200Total expected cash receipts in February:$9,600 + $24,000 + $12,000 + $13,600 + $34,000 + $17,000 + $15,200 = $125,600Less: Uncollectible accounts: $125,600 x 5% = $6,300Expected cash receipts in February: $125,600 - $6,300 = $119,300

A Company's History Indicates That 20% of Its Sales Are