Question

Funcycle Manufacturing's budget includes the following credit sales for the current year: September, $145,000; October, $136,000; November, $120,000; December, $157,000. Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale, 50% in the first month after sale, and 35% in the second month after sale. What are the cash collections of credit sales in the month of December?

Answer 1

The cash collections of credit sales in the month of December are $131,150

Step-by-step explanation:

The cash collections of credit sales in the month of December = 15% of credit sales in December + 50% of credit sales in November + 35% of credit sales in October

Funcycle Manufacturing's budget includes the credit sales: October, $136,000; November, $120,000; December, $157,000

Therefore,

Cash collected in December = 15%x$157,000 + 50%x$120,000 + 35%x$136,000 = $131,150