Question

Kennedy Enterprises has budgeted sales for the months of September and October at​ $170,000and $140,000, respectively. Monthly sales are​ 60% credit and​ 40% cash. Of the credit​ sales, 30% are collected in the month of sale and​ 70% are collected in the following month. What are the October cash collections from​ customers?

Answer 1

Kennedy Enterprises' October cash collections include cash sales of $56,000 for October plus $71,400 from September's credit sales, totaling $127,400 collected in cash in October.

Step-by-step explanation:

To calculate the October cash collections from customers for Kennedy Enterprises, we need to consider both cash sales for October and the portion of credit sales from September that are collected in October. Here's the step-by-step calculation:

• Determine the part of October's sales that is cash: $140,000 x 40% = $56,000.
• Calculate the credit sales from September that will be collected in October: $170,000 x 60% x 70% = $71,400.
• Add both amounts to get the total cash collections for October: $56,000 (October cash sales) + $71,400 (September credit sales collected in October) = $127,400.

Therefore, Kennedy Enterprises should expect to collect $127,400 in cash during the month of October.

Answer 2

$152,600

Step-by-step explanation:

Given that,

September sales = $170,000

October sales = $140,000

Monthly sales are 60% credit and 40% cash.

Of the credit sales, 30% are collected in the month of sale, and 70% are collected in the following month.

Cash collections for the month of October:

= 40% of October sales + 30% of the credit sales in October + 70% of the credit sales in September

= (0.4 × $140,000) + (0.3 × 0.6 × $140,000) + (0.7 × 0.6 × $170,000)

= $56,000 + $25,200 + $71,400

= $152,600