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22 April, 10:12

ABC Company began operations on January 1, 2018. It makes all sales on account and expects the following collection pattern: 30% are collected in the month of the sale; 60% are collected in the first month after the sale and 10% are collected in the second month after the sale. Of budgeted sales for January, February, and March were $20,000, $60,000, and $70,000, respectively, what were the firm's budgeted collections for March

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  1. 22 April, 11:19
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    The firm's budgeted collections for March is $64,000

    Explanation:

    For collecting the firm's budgeted collections for march, the computation is shown below:

    30% are collected in the month of the sale:

    = 30% of March sale

    = 30 * $70,000

    = $21,000

    60% are collected in the first month after the sale:

    It means the calculations based on February month

    = 60% * $60,000

    =$36,000

    10% are collected in the second month after the sale:

    It means the calculations based on January month

    = 10% * $70,000

    = $7,000

    Now, add these three month sales which equals to

    = $21,000 + $36,000 + $7,000

    = $64,000

    Hence, the firm's budgeted collections for March is $64,000
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