Question

Novak Industries expects credit sales for January, February, and March to be $196,100, $265,900, and $290,900, respectively. It is expected that 70% of the sales will be collected in the month of sale, and 30% will be collected in the following month. Calculate cash collections from customers for each month. NOVAK INDUSTRIES Schedule of Expected Collections Collections by Month Jan Feb Mar Total $ $ $

Answer 1

Cash collections from credit sales for Novak Industries are calculated based on monthly sales projections and collection percentages. In January, February, and March, the expected collections are $137,270, $244,960, and $283,400 respectively, following the 70/30 collection split.

Step-by-step explanation:

To calculate the cash collections from customers for each month for Novak Industries, we will use the sales projections along with the collection percentages provided. For January, we expect credit sales of $196,100 with 70% collected in the same month and the remaining 30% collected in February.

Using this approach, the following collections are expected:

• January: 70% of $196,100 = $137,270 collected in January.
• February: 30% of January sales = $58,830 plus 70% of February sales ($265,900) = $186,130, making a total of $244,960 collected in February.
• March: 30% of February sales = $79,770 plus 70% of March sales ($290,900) = $203,630, totaling $283,400 collected in March.

This schedule provides the cash inflow from credit sales based on the anticipated collections.