Question

Budgeted sales for the Kelsey Company for the first quarter are as follows: January February March Credit Sales $250,000 $300,000 $500,000 The regular pattern of collection of credit sales is 40% in the month of sale and 60% in the month following sale. There are no bad debts. The budgeted cash collections for March would be:

Answer 1

$380,000

Step-by-step explanation:

The computation of the budgeted cash collections for March is shown below:

= March credit sales × month of sale percentage + February credit sales × following month sale percentage

= $500,000 × 40% + $300,000 × 60%

= $200,000 + $180,000

= $380,000

We simply considered the Feb and march credit sales for finding out the cash collections