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20 December, 04:52

The Task Company is to begin operations in April. It has budgeted April sales of $30,000, May sales of $34,000, June sales of $40,000, July sales of $42,000, and August sales of $38,000. Note that 10% of each month's sales will represent cash sales; 75% of the balance will be collected in the month following the sale, 17% the second month, 6% the third month, and the balance is bad debts. What is the amount of cash to be collected in the month of July?

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  1. 20 December, 06:35
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    July collection = $41,780

    Explanation:

    Sales in the month of July = $42,000

    Given,

    10% of each month's sales will represent cash sales

    75% of the balance will be collected in the month following the sale

    17% the second month

    6% the third month

    Therefore, we also need the sales amount of April, May, and June because the collection continues up to 4th month.

    Therefore, Task company will collect total cash in the month of July =

    6% from the sale of April = $30,000*6% = $ 1,800

    17% from the sale of May = $34,000*17% = $ 5,780

    75% from the sale of June = $40,000*75% = $30,000

    10% from the sale of July = $42,000*10% = $ 4,200

    $ 41,780
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