Question

Given the following information, how much cash is collected in February? January Total Sales = $500,000 February Total Sales = $400,000 Assumptions for the budget: • 20 percent is collected in the month of sales • 75 percent is collected in the next month • 2 percent is taken as a cash discount • 3 percent will not be collected because accounts are written off as bad deb

Answer 1

$455,000

Step-by-step explanation:

Calculation to determine how much cash is collected in February

Cash collected in February=($500,000 x.75 )+ ($400,000 x.20)

Cash collected in February=$375,000+$80,000

Cash collected in February= $455,000

Therefore The amount of Cash collected in February is $455,000