Question

our Company will open a new store on January 1. Based on experience from its other retail outlets, Entertainment Inc. is making the following sales predictions: Cash Sales Credit Sales January $80,000 $160,000 February $50,000 $170,000 March $60,000 $190,000 April $50,000 $210,000 You estimate that the pattern of collection of credit sales will be 45% in the month of sale and 40% in the month following the sale; 8% in the third month, the remaining 7% is uncollectable. Based on this data calculate the estimated total cash collections for March

Answer 1

Entertainment Inc.

The estimated total cash collections for March are:

= $226,300.

Step-by-step explanation:

a) Data and Calculations:

Cash Sales Credit Sales

January $80,000 $160,000

February $50,000 $170,000

March $60,000 $190,000

April $50,000 $210,000

January February March April

Credit Sales $160,000 $170,000 $190,000 $210,000

Cash collections:

45% sales month $72,000 $76,500 $85,500 $94,500

40% ffg sales 64,000 68,000 76,000

8% third month 12,800 13,600

7% uncollectible

Total cash collections for March $166,300

Cash sales 80,000 50,000 60,000 50,000

Total cash collected for March $226,300