The sales budget for Lyn's Clothing Co for the first three months of the year is expected to be $30,000,$40,000 and $50,000 with 40% of each month's sales being on credit.Collections of accounts receivable are scheduled at 25% during the month of sale,70% during the month following the sale with 5% uncollectable.The total budgeted cash receipts from sales for the second month will be:

Question

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The total sales for the second month are $40,000. 40% of this is on credit, so the credit sales for the second month are $16,000. 25% of this is collected during the month of sale, so the cash receipts from credit sales for the second month are $4,000. 70% of the credit sales from the previous month are collected during the second month, so the cash receipts from credit sales from the previous month are $28,000. The total budgeted cash receipts from sales for the second month are therefore $4,000 + $28,000 = $32,000.

The Sales Budget for Lyn's Clothing Co for the First