Question

A firm expects to have sales of : JANUARY FEBRUARY MARCH $ 30,000 $ 35,000 $ 40,000 Collection Percentages: 20% of sales are for cash 40% are credit sales paid in the month following the sale 40% are credit sales paid 2 months following the sale What are the cash receipts for the firm in March?

Answer 1

$34,000

Step-by-step explanation:

The computation of the cash receipts for the firm in March is shown below:-

January the credit sales collected in March = 40% × $30,000

= $12,000

February credit sales collected in March = 40% × $35,000

= $14,000

March cash sales = 20% × $40,000

= $8,000

Total expected cash receipts for March = $12,000 + $14,000 + $8,000

= $34,000