Question

Budgeted sales in Acer Corporation over the next four months are given below: Budgeted sales September October November December $120,000 $140,000 $180,000 $160,000 Thirty percent of the company's sales are for cash and 70% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 20% are collected in the second month following sale. Given these data, cash collections for December should be:

Answer 1

$161,400

Step-by-step explanation:

Cash collection calculation

December cash sales ($160,000*30%) = $48,000

Credit sales

December: (160000*70%*50%) = $56,000

November: (180000*70%*30%) = $37,800

October: (140,000*70%*20%) = $19,600

Total cash collections $161,400