A company began its operations on April 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for April, May, and June. The company expects to sell 50% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 40% in the month following the sale. The budgeted cash collections in May are:

Question

Business

Curtis Briggs

27 January, 17:17

A company began its operations on April 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for April, May, and June. The company expects to sell 50% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 40% in the month following the sale. The budgeted cash collections in May are:

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Francisco Hunter · Answer 1

Total cash collection May = $306,000

Explanation:

Giving the following information:

Sales:

April = $250,000

May = $320,000

June = $410,0000

The company expects to sell 50% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 40% in the month following the sale.

Cash collection May:

Sales on cash May = 320,000*0.5 = 160,000

Sales on Account May = (160,000*0.6) = 96,000

Sales on Account April = (250,000*0.5) * 0.4 = 50,000

Total cash collection May = $306,000