Question

All of Pocast Corporation's sales are on account. Sixty percent of the credit sales are collected in the month of sale, 30% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: January February March AprilTotal sales $700,000 $500,000 $400,000 $600,000Cash receipts in April are expected to be:a. $530,000b. $410,000c. $460,000d. $360,000

Answer 1

Option (a) $530,000

Step-by-step explanation:

Data provided in the question:

Sales collected in the month of sale = 60% of the credit sales

Sales collected in the following month = 30%

Sales collected in the second month = 10%

Month January February March April

Total sales $700,000 $500,000 $400,000 $600,000

Now,

Cash receipts in April

=( 60% of April sales ) + (30% of March sales) + (10% of February sales)

= ( 0.6 × $600,000) + ( 0.3 × $400,000) + ( 0.1 × $500,000 )

= $360,000 + $120,000 + $50,000

= $530,000

hence,

Option (a) $530,000