Question

Kam Department Store reported the following information for 2013: October November December Budgeted sales $1,240,000 $1,160,000 $1,440,000 All sales are on credit. Customer amounts on account are collected 50% in the month of sale and 50% in the following month. How much cash will Kam receive in November? $1,200,000

Answer 1

The kam should receive cash of $1,200,000 in November month

Step-by-step explanation:

For computing the cash receipts for November month, we have to calculate the monthly cash receipts which is equals to

= 50% of November month sales + 50% of October month sales

= 50% × $1,160,000 + 50% × $1,240,000

= $580,000 + $620,000

= $1,200,000

In the question the collection criteria is given so we use that and October month sale should not be recognized because in the question, the criteria of October month is not given. Thus, it would not be considered in the computation part.

Hence, the kam should receive cash of $1,200,000 in November month