Question

Cainas predicts the following sales: January $20,000, February $30,000 March $40,000. 20% of sales are made in cash, with the remaining credit sales collected 50% in the current month and 50% the following month. The budgeted cash collections for March are:

A. $8,000
B. $24,000
C. $39,000
D. $36,000

Answer 1

The budgeted cash collections for March would be $43,000. None of the options are correct.

Step-by-step explanation:

To calculate the budgeted cash collections for March, we need to consider the different sales transactions between cash and credit. Based on the information provided, 20% of sales are made in cash, which means $40,000 * 0.2 = $8,000 is collected in cash. The remaining 80% of sales are credit sales, with 50% collected in the current month and 50% in the following month.

In this case, for March, we would collect 50% of February's credit sales and 50% of March's credit sales. This would be $30,000 * 0.5 = $15,000 for February credit sales, and $40,000 * 0.5 = $20,000 for March credit sales. Adding up the cash and credit collections, the budgeted cash collections for March would be $8,000 + $15,000 + $20,000 = $43,000.