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1 April, 04:26

Benton Company's sales budget shows the following expected total sales: Month Sales January $ 25,000 February $ 30,000 March $ 35,000 April $ 40,000 The company expects 80% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off.

The total cash receipts during April would be:

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  1. 1 April, 05:14
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    Total Cash inflows from sales = $36640

    Explanation:

    given data

    Month Sales

    January $25,000

    February $30,000

    March $35,000

    April $40,000

    to find out

    The total cash receipts during April

    solution

    first we get here Cash sales of April month that is express as

    Cash sales of April month = $40,000 * 30%

    Cash sales of April month = $40,000 * 0.30

    Cash sales of April month = $12000

    and

    now we get collection from credit sale of April that is

    collection from credit sale = ($40000 * 70%) * 25%

    collection from credit sale = ($40000 * 0.70) * 0.25

    collection from credit sale = $7000

    and

    Collection from Credit sales of March that is

    Collection from Credit sales = ($35000 * 70%) * 72%

    Collection from Credit sales = ($35000 * 0.70) * 0.72

    Collection from Credit sales = $17640

    so

    Total Cash inflows from sales will be

    Total Cash inflows from sales = $12000 + $7000 + $17640

    Total Cash inflows from sales = $36640
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