Question

Company's past experience indicates that 80% of its credit sales are collected in the month of sale and 15% in the next month. The remainder is never collected. The company's budgeted credit sales totaled: January 99,700$, March 91,000$, February 109,100$. How much are expected cash receipts for February? a) $77,280 b) $87,280 c) $71,280 d) $81,280

Answer 1

The expected cash receipts for February are $102,235, which is obtained by adding 80% of February sales ($87,280) to 15% of January sales ($14,955). The given options do not match this calculation, indicating a potential error in the available choices.

none of the given option are correct

Step-by-step explanation:

To calculate the expected cash receipts for February, we need to consider the collections from February sales as well as the collections of the remaining 15% from January sales. Since 80% of February sales are collected in February and 15% of January sales are collected in February, the calculations are as follows:

• 80% of February sales: 0.80 * $109,100 = $87,280
• 15% of January sales: 0.15 * $99,700 = $14,955

Now, we add these two values together to get the total expected cash receipts for February:

$87,280 + $14,955 = $102,235

However, this provided answer is not listed in the options A, B, C, or D. The closest option to the calculated value is $102,235, so it seems there may be a mistake in the options provided.

none of the given option are correct