Question

Pinewood Department Store reported the following information for 2020: October November December Budgeted sales $1,300,000 $1,600,000 $1,900,000 All sales are on credit. Customer amounts on account are collected 40% in the month of sale and 60% in the following month. How much cash will Pinewood receive in November

Answer 1

Pinewood Department Store will receive $1,480,000 in cash in November.

Step-by-step explanation:

To calculate the cash that Pinewood Department Store will receive in November, we need to consider the customer collections from both October and November sales. The budgeted sales for November are $1,600,000. According to the given information, 40% of sales are collected in the month of sale, and 60% are collected in the following month.

Therefore, the cash collected in November will be:

40% of October sales (40% x $1,300,000) = $520,000

60% of November sales (60% x $1,600,000) = $960,000

The total cash Pinewood will receive in November is $520,000 + $960,000 = $1,480,000.

Answer 2

$1,420,000

Step-by-step explanation:

Total sales of October = $1,300,000. Collected in November = (60% of 1,300,000) = $780,000

November sales = $1,600,000. 40% sales of November = $640,000

Total cash collection = $780,000 + $760,000

Total cash collection = $1,420,000

So, the cash that Pinewood will receive in November is $1,420,000.