Question

The WRT Corporation makes collections on sales according to the following schedule:

25% in month of sale
65% in month following sale
5% in second month following sale
5% uncollectible
The following sales have been budgeted:
Sales
April $120,000
May $100,000
June $110,000
Budgeted cash collections in June would be:_____.
a. $27,500.
b. $98,500.
c. $71,000.
d. $115,500.

Answer 1

Total cash collection June= $98,500

Step-by-step explanation:

Giving the following information:

25% in month of sale

65% in month following sale

5% in second month following sale

5% uncollectible

The following sales have been budgeted:

Sales

April $120,000

May $100,000

June $110,000

Cash collection June:

Cash collection from June= 110,000*0.25= 27,500

Cash collection from May= 100,000*0.65= 65,000

Cash collection from April= 120,000*0.05= 6,000

Total cash collection June= $98,500