Question

Frankie's Chocolate Co. reports the following information from its sales budget: Expected Sales: July $ 90,000 August 104,000 September 120,000 Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is: Multiple Choice $120,000. $78,000. $130,500. $108,000. $30,000.

Answer 1

$108,000

Step-by-step explanation:

September budgeted collections:

25% of september sales

25% of 120,000 = 30,000

75% of previous month (August)

75% of 104,000 = 78,000

Total collection from sales 108,000

Notes:

For this type of question we must first think on which date are we stand.

In this case september.

Then we calculate september value.

Next we check if previous month influence september number

Next we check if two month before influence, in this case not, but imagine if a percent of sales were collected two month from the sale, then it will influence.

Finally we check if there is something in the future, like payment in advance from custoemr for example.