Question

Freemore Company has the following sales budget for the last six months of 2018: July $206,000 October $181,000 August 168,000 November 203,000 September 209,000 December 185,000 Sales are immediately due, however the cash collection of sales, historically, has been as follows: 55% of sales collected in the month of sale, 35% of sales collected in the month following the sale, 7% of sales collected in the second month following the sale, and 3% of sales are uncollectible. Cash collections for September are ________. $126,710 $199,930 $188,170 $173,750

Answer 1

the cash collection for the September month is $188,170

Step-by-step explanation:

The computation of the cash collection for the September month is given below:

= September collection + August collection + July collection

= $209,000 ×0.55 + $168,000 × 0.35 + $206,000 × 0.07

= $114,950 + $58,800 + $14,420

= $188,170

hence, the cash collection for the September month is $188,170

Therefore the third option is correct