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13 September, 02:14

20% of the sales are for cash, and 80% are on credit. 25% of the credit sales are collected in the month of the sale, and 75% are collected the next month. What are the expected cash receipts during September?

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  1. 13 September, 03:19
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    The expected cash receipts during September are 40% of the sale in September and 60% of the sales in August.

    Explanation:

    25% of the credit sales are collected in the month of the sale, this is (25% x 0.8) 20% of the sales are collected in the month of the sale.

    20% of the sales are for cash.

    Therefore 60% of the sales are collected in the next month.

    The expected cash recceipts during the month of the sale (September) are

    40% (20% of collected sales and 20% of the sales are for cash) of the sale in September and 60% of the sales in August.
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