Answer:
$269,750
The complete question
A company has projected the following sales for the spring quarter of 2014:
April $200,000
May $250,000
June $275,000
65% of all sales are paid for with cash. The remainder is on credit.
The pattern for credit receivables collections are:
The Month of Sale 60%
Month After-Sale 30%
Second Month After-Sale 10%
What are the forecast cash collections for the Month of June?
Step-by-step explanation:
Cash collection for June will include
65% cash payment for June sales
=65% of $275,000
=65/100 x $275,000
=0.65 x 275,000
=$178,750
cash sales =$178,750
Credit sales
credit collection from June sales:
65% was sold cash, meaning 35% was sold on credit.
35% of 275,000 = 35/100 x 275,000
=0.35 x 275,000
=96,250
cash collection for credit sales for June
=60% of 96,250
=0.6 x 96,250
=$57,750
May sales
65% of $250,000 was paid cash
35% was on credit.
35% of $250,000
=35/100 x 250,000
=$87,500
cash collection for may credit sales
=30% of 87,500 was paid in June
=0.3 x 87,500
=$26,250
From April sales
65% of sales were cash and 35% of credit
35$ of$200,000 was credit
=0.35 x $200,000
=$70,000
10% was paid in June
=10/100x $70,000
=0.1 x $70,000
=7,000
Total cash collection for June
=$178,750 + $57,750 +$26,250 + 7,000
=$269,750