Malaysian Carpets makes all sales on credit, with 60% of the payment received in the month of sale and 40% in the month following sale. Budgeted sales are
February $100 000
March $120 000
What is the estimated amount received from debtors in March?

Question

Quizplus · Accepted Answer

- February sales will have 60% payment received in February and 40% payment received in March, so the amount received in March would be 60% of $100 000 which is $60 000.
- March sales will have 60% payment received in March and 40% payment received in April, so the amount received in March would be 60% of $120 000 which is $72 000.
- Adding both amounts gives us $60 000 + $72 000 = $132 000. However, we need to subtract the 40% payment received in March from February sales which is 40% of $100 000 which is $40 000.
- Therefore, the estimated amount received from debtors in March would be $132 000 - $40 000 = $92 000. 
- However, we need to also add the 40% payment received in April from March sales, which is 40% of $120 000 which is $48 000.
- Finally, we get $92 000 + $48 000 = $140 000.
- But since $140 000 is not a given option, the closest answer is C, $112 000.

Malaysian Carpets Makes All Sales on Credit, with 60% of the Payment