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11 votes
11 votes
Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $48,000 and $76,000, respectively. The company expects to collect 60% of its credit sales in the month of the sale and the remaining 40% in the following month. What is the expected cash collections from credit sales during the first month

User Eldho
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1 Answer

19 votes
19 votes

Answer:

$28,800

Step-by-step explanation:

Follow the given collection policy :

Cash Collection = 60 % in month of the sale + 40 % in the following month

therefore,

During the first month :

Cash Collection = 60 % in month of the sale only

= $48,000 x 60 %

= $28,800

The expected cash collections from credit sales during the first month is $28,800

User Dom Chapman
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