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17 September, 07:40

Budgeted sales in Acer Corporation over the next four months are given below: September October November December Budgeted sales $140,000 $150,000 $170,000 $130,000Twenty-five percent of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections for December should be: $119,500 $98,125 $136,375 $103,875

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  1. 17 September, 09:53
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    total cash collection during December = $136375

    Explanation:

    given data

    September Budgeted sales = $140,000

    October Budgeted sales = $150,000

    November Budgeted sales = $170,000

    December Budgeted sales = $130,000

    cash = 25 %

    account = 75%

    to find out

    cash collections for December should be

    solution

    we get here cash collection during december as

    first we get here for cash sale that is

    cash sale = 25 % of $130000 = $32500 ... 1

    and we get collection from credit sales that is for every month

    sale for October = 15% * 75% * $150,000 = $16875 ... 2

    sale for November = 30% * 75% * $170,000 = $38250 ... 3

    sale for December = 50% * 75% * $130,000 = $48750 ... 4

    so total cash collection during December = add equation 1 + 2 + 3 + 4

    total cash collection during December = $32500 + $16875 + $38250 + $48750

    total cash collection during December = $136375
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