Question

Answer the following questions using the information below:

Finmin Company has the following sales budget for the last six months of 2015:

July $200,000 October $180,000
August 160,000 November 200,000
September 200,000 December 180,000

Sales are immediately due, however the cash collection of sales, historically, has been as follows:
65% of sales collected in the month of sale,
25% of sales collected in the month following the sale,
8% of sales collected in the second month following the sale, and
2% of sales are uncollectible.


*9) Cash collections for September are ________.*
A) $143,000
B) $170,000
C) $186,000
D) $204,000
Objective 6.A

Answer 1

The cash collections for September, based on the sales budget and historical collection pattern, would amount to $196,000.

Step-by-step explanation:

To calculate the cash collections for September, we need to consider the sales budget and the historical collection pattern. According to the sales budget, the sales for September were $200,000. Based on the historical collection pattern, 65% of sales are collected in the month of sale, 25% in the month following the sale, and 8% in the second month following the sale. Therefore, the cash collections for September would be:

1. Collections in September (65% of $200,000): $130,000
2. Collections in October (25% of $200,000): $50,000
3. Collections in November (8% of $200,000): $16,000

The total cash collections for September would be $130,000 + $50,000 + $16,000 = $196,000.