Question

The WRT Corporation makes collections on sales according to the following schedule: 25% in month of sale 65% in month following sale 5% in second month following sale 5% uncollectible The following sales have been budgeted: Budgeted cash collections in June would be:

Answer 1

$98,500

Step-by-step explanation:

The complete part of the question is as follows;

The following sales have been budgeted: Sales April $120,000 May $100,000 June $110,000 Budgeted cash collections in June would be: $27,500 $98,500 $71,000 $115,500.

Solution:

Given that the cash collection is done as follows; 25% in month of sale 65% in month following sale 5% in second month following. It means that cash collection in the month of June will be made of 25% of sales in June, 65% of sales in May, 5% sales in April

Hence, Budgeted cash collections in June would be

= 25% × $110,000 + 65% × $100,000 + 5% × $120,000

= $27,500 + $65,000 + $6,000

= $98,500