The following credit sales are budgeted by Novak Corp.: May $580700 June 854000 July 1195600 August 1024800 The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of August is $1054176. $1024800. $1004300. $956480.

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Business

Edwin Terrell

26 July, 00:21

The following credit sales are budgeted by Novak Corp.: May $580700 June 854000 July 1195600 August 1024800 The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of August is $1054176. $1024800. $1004300. $956480.

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Ismael Noble · Answer 1

The anticipated collections for August are $1024800

Explanation:

Based on the past experience part, the cash inflows for August will include 8% of June's sales collection, 20% of July's sales collection and 70% of August's sales collection.

Thus, the anticipated collection for August will be:

8% of June' sales = 854000 * 0.08 = 68320 20% of July's sales = 1195600 * 0.2 = 239120 70% of August sales = 1024800 * 0.7 = 717360

Total anticipated collection-August = 68320 + 239120 + 717360 = $1024800