Final answer:
The cash collections for Thornton, Inc. for the month of October are $279,200. This amount includes cash sales from October and 50% of credit sales from September and October collected in October.
Step-by-step explanation:
To calculate the cash collections for Thornton, Inc. for the month of October, we need to consider two components of collections:
Cash sales in October,
Collections of credit sales from September and October.
Eighty percent of sales are on credit, so for September's sales of $302,000, the credit sales amount to $302,000 * 0.80 = $241,600. Since 50% of these sales are collected in the month after the sale, the amount collected in October from September's credit sales is $241,600 * 0.50 = $120,800.
October's total sales amount to $264,000, with cash sales being 20% of this amount. Therefore, the cash sales collected in October are $264,000 * 0.20 = $52,800.
Additionally, 50% of October's credit sales (80% of $264,000) are collected within the same month, which equals $264,000 * 0.80 * 0.50 = $105,600.
The total cash collections for October are the sum of cash sales for the month plus collected credit sales from September and October: $120,800 (from September) + $52,800 (October cash sales) + $105,600 (October credit sales collected) = $279,200.