Ballentine Company expects sales for June,July,and August of $48,000,$54,000,and $44,000,respectively.Experience suggests that 40% of sales are for cash and 60% are on credit.The company collects 50% of its credit sales in the month following sale,45% in the second month following sale,and 5% are not collected.What are the company's expected cash receipts for August from its current and past sales?

Question

Quizplus · Accepted Answer

The cash receipts for August include 40% of August sales ($44,000 * 0.40 = $17,600), 50% of July credit sales ($54,000 * 0.60 * 0.50 = $16,200), and 45% of June credit sales ($48,000 * 0.60 * 0.45 = $12,960). Adding these amounts gives $17,600 + $16,200 + $12,960 = $46,760.

Ballentine Company Expects Sales for June,July,and August of $48,000,$54,000,and $44,000,respectively