Question

The following credit sales are budgeted by Terra Co.: January $204,000 February 300,000 March 420,000 April 360,000The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April isa) 336,000b) 360,000c) 352,800d) 370,320

Answer 1

To calculate the anticipated cash inflow for April, we need to determine the amount of credit sales that will be collected in April, May, and June. The anticipated cash inflow for April is $360,000.

Step-by-step explanation:

To calculate the anticipated cash inflow for April, we need to determine the amount of credit sales that will be collected in April, the amount that will be collected in the month following the sale (May), and the amount that will be collected in the second month following the sale (June).

Based on the given information, 70% of the credit sales in April will be collected in April, 20% will be collected in May, and 8% will be collected in June.

Therefore, the anticipated cash inflow for April can be calculated as:

(70% × $360,000) + (20% × $420,000) + (8% × $300,000) = $252,000 + $84,000 + $24,000 = $360,000.

Option b) $360,000 is the correct answer.

Answer 2

The correct answer is B.

Step-by-step explanation:

Giving the following information:

February= 300,000

March= 420,000

April= 360,000

The company's experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale.

Cash collection:

From February= (300,000*0.08)= $24,000

From March= (420,000*0.2)= 84,000

From April= 360,000*0.7= 252,000

Total= $360,000