Question

Kaspar Industries expects credit sales for January, February, and March to be $202,100, $264,200, and $319,300, respectively. It is expected that 75% of the sales will be collected in the month of sale, and 25% will be collected in the following month.Compute cash collections from customers for each month.Collections from CustomersCredit SalesJanuaryFebruaryMarchJanuary$$$February

Answer 1

January $151,575

February $248,675

March $305,525

Step-by-step explanation:

The computation of the cash collections is shown below:

January month

= January credit sales × month of sale collection percentage

= $202,100 × 75%

= $151,575

February month

= January credit sales × following month collection percentage + February credit sales × month of sale collection percentage

= $202,100 × 25% + $264,200 × 75%

= $50,525 + $198,150

= $248,675

March month

= February credit sales × following month collection percentage + February credit sales × month of sale collection percentage

= $264,200 × 25%+ $319,300 × 75%

= $66,050 + $239,475

= $305,525