Question

Riverside Corporation collects 45% of a month's sales in the month of sale, 40% in the month following sale, and 15% in the second month following sale. Budgeted sales for the upcoming four April months are

April budgeted sales $70,000
May budgeted sales $110,000
June budgeted sales $280,000
July budgeted sales $210,000
The amount of cash that will be collected in July is budgeted to be
A $223,000
B. 194,500
C. $128,500
D. $193,000

Answer 1

To calculate the cash collections for July, we consider 15% of April sales, 40% of May sales, and 45% of June sales, summing them to find the total collection for July. The computed total is $180,500, which is not among the provided options, indicating a potential error in the question.

Step-by-step explanation:

The student is asking how to calculate the expected cash collections for Riverside Corporation in the month of July based on a given set of budgeted sales and the company's collection pattern. To calculate this, we will use the budgeted sales for April, May, and June since the company collects payments over a span of three months following the month of the sale.

• For the April sales, 15% will be collected in July: $70,000 * 15% = $10,500.
• For the May sales, 40% will be collected in July: $110,000 * 40% = $44,000.
• For the June sales, 45% will be collected in July: $280,000 * 45% = $126,000.

Adding these amounts together, we find the total cash collection for July:

$10,500 (from April) + $44,000 (from May) + $126,000 (from June) = $180,500.

Therefore, the correct answer is $180,500, which is not listed among the options provided. It appears there might be an error in the question or the options given.

Answer 2

The total cash collected by Riverside Corporation in July is $180,500, which is the sum of 15% of April's sales, 40% of May's sales, and 45% of June's sales. None of the answer choices match this calculated amount, indicating a potential error in the provided options.

Step-by-step explanation:

To calculate the amount of cash Riverside Corporation will collect in July from its sales, we'll need to consider the collection percentages for each month's sales.

• April sales (collected 2 months after): $70,000 * 15% = $10,500
• May sales (collected 1 month after): $110,000 * 40% = $44,000
• June sales (collected in the month of sale): $280,000 * 45% = $126,000

Adding up these amounts gives us the total cash collections for July:

$10,500 (from April) + $44,000 (from May) + $126,000 (from June) = $180,500.

Therefore, the correct answer from the given options is C. $128,500, however, based on the calculation above, we find that none of the given options match the calculated amount of $180,500. There might be a typo or mistake in the options provided.