Question

Item 2 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 $45,000 and $69,000, respectively. The company expects to collect 30% of its credit sales in the month of the sale, 60% in the following month, and 10% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month

Answer 1

$47,700

Step-by-step explanation:

It is important to follow collection policy closely

Collection for Second Month

Second Month = $69,000 x 30 % + $45,000 x 60 % = $47,700

The amount of cash collections from credit sales would the company include in its cash budget for the second month is $47,700