Question

Ajax Corporation estimates that for credit sales, 20% of cash is received in the month of sale; 60% in the month after the sale, and 15% second month after the sale. The remainder is never collected. Ajax had credit sales of $23,000 in January; $23,000 in February, and $19,000 in March. Given the following information, determine the cash collections for March.

A)$22,700
B)$20,600
C)$18,500

Answer 1

The total cash collections for Ajax Corporation in March, based on the percentages and sales figures provided, would be $21,050. This is calculated by summing 20% of March's sales, 60% of February's sales, and 15% of January's sales.

Step-by-step explanation:

To determine the cash collections for March from Ajax Corporation's credit sales, we will apply the percentages to the relevant months' sales figures:

• 20% of March sales are collected in March: 0.20 × $19,000 = $3,800
• 60% of February sales are collected in March: 0.60 × $23,000 = $13,800
• 15% of January sales are collected in March: 0.15 × $23,000 = $3,450

Summing these amounts gives us the total cash collections for March:

$3,800 (from March) + $13,800 (from February) + $3,450 (from January) = $21,050

However, since none of the options match this value, and the question may contain a typo, let us check our calculations once more. If there's a typo in the options and $21,050 should have been an option, it would be the correct answer.

If there's a typo in the percentage values provided in the question, we would need correct figures to determine the right answer. If not, there might be additional information or context we are missing to align the answer with the provided options. As it stands, given the correct interpretation of the question, $21,050 seems to be the correct amount of cash collections for Ajax Corporation in March.