Question

Trumbull Corporation budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be: a. $169,800. b. $147,960. c. $197,880. d. $194,760.

Answer 1

a. $169,800

Step-by-step explanation:

As for the provided information we have,

Sales data, for each month

July $120,000

August $211,000

September $198,000

Cash receipt budgeted for September shall be:

36% of sale of the month of July = $120,000
`*` 36% = $43,200

60% of sale of the month of August = $211,000
`*` 60% = $126,600

Thus, total expected amount = $169,800

Therefore, correct option is

a. $169,800