Question

​Camellia, a merchandising​ company, has provided the following extracts from their budget for the first quarter of the forthcoming​ year: Jan Feb March Sales ​(25​% ​cash) $ 550 comma 000 $ 600 comma 000 $ 800 comma 000 The company collects 60​% of credit sales in the same month and the balance in the next month. Calculate the collections from the customers for the month of February. A. $ 585 comma 000 B. $ 420 comma 000 C. $ 600 comma 000 D. $ 435 comma 000

Answer 1

A) 585,000

Step-by-step explanation:

1) January sales 550,000

25% in cash

75% on credit, of which 40% in the next month (Feb), which is = 75% x 40% 550,000 = $165,000

2) February sale = 600,000

25% in cash = 25% x 600,000 = 150,000

75% on credit, of which 60% in the same month (Feb), which is = 75% x 60% x 600,000 = 270,000

Total collections in Feb = 165,000 + 150,000 + 270,000 = 585,000