Brown Company has developed the following sales projections for the calendar year: Normal cash collection experience has been that 50% of sales is collected during the month of sale and 45% in the month following the sale.The remaining 5% of sales are never collected.Brown's budgeted cash collections for the third calendar quarter are: (CMA adapted)

Question

Brown Company has developed the following sales projections for the calendar year:  Normal cash collection experience has been that 50% of sales is collected during the month of sale and 45% in the month following the sale.The remaining 5% of sales are never collected.Brown's budgeted cash collections for the third calendar quarter are: (CMA adapted)

Quizplus · Accepted Answer

To determine the budgeted cash collections for the third calendar quarter, we need to first determine the sales made in the second quarter. 
Sales in the second quarter = ($600,000 + $700,000 + $800,000) = $2,100,000 
Cash collections in the second quarter = (50% of $2,100,000) + (45% of $2,100,000) = $1,155,000 
Budgeted cash collections for the third quarter = (50% of $900,000) + (45% of $900,000) = $450,000 
Therefore, the correct choice is (C) $414,000.

Brown Company Has Developed the Following Sales Projections for the Calendar