Benton Company's sales budget shows the following expected total sales: The company expects 80% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off. The total cash receipts during April would be: $$\begin{array} { | l | c | }
\hline { \text { Month } } & \text { Sales } \
\hline \text { January } & \$ 25,000 \
\hline \text { February } & \$ 30,000 \
\hline \text { March } & \$ 35,000 \
\hline \text { April } & \$ 40,000 \
\hline
\end{array}$$

Question

Benton Company's sales budget shows the following expected total sales: The company expects 80% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off. The total cash receipts during April would be: $$\begin{array} { | l | c | } 
\hline  { \text { Month } } & \text { Sales } \
\hline \text { January } & \$ 25,000 \
\hline \text { February } & \$ 30,000 \
\hline \text { March } & \$ 35,000 \
\hline \text { April } & \$ 40,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

In April, cash receipts include 25% of April's credit sales ($40,000 * 80% * 25% = $8,000) and 72% of March's credit sales ($35,000 * 80% * 72% = $20,160). Adding these gives $8,000 + $20,160 = $28,160. Including April's cash sales ($40,000 * 20% = $8,000), the total is $28,160 + $8,000 = $36,160.

Benton Company's Sales Budget Shows the Following Expected Total Sales