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6 November, 12:07

Benton Company's sales budget shows the following expected total sales: Month Sales January $ 18,000 February $ 37,000 March $ 42,000 April $ 47,000 The company expects 70% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 67% 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. 6 November, 13:43
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    The total cash receipt in the month of April amounts to $42,023

    Explanation:

    Total cash receipt in the month of April = March credit sales amount + April credit sale amount (25% is received) + April cash sales amount

    = $29,400 * 67% + $32,900 * 25% + $14,100

    = $19,698 + $8,225 + $14,100

    = $42,023

    Working Note:

    March credit sales = March sales * 70%

    = $42,000 * 70%

    = $29,400

    April Cash Sales = April Sales * 30%

    = $47,000 * 30%

    = $14,100

    April Credit Sale = April Sales * 70%

    = $47,000 * 70%

    = $32,900

    From the credit sale, 25% is received in the month of April

    So,

    = $32,900 * 25%

    = $8,225
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