Question

Center Company makes collections on sales according to the following schedule: 40% in the month of sale 50% in the month following sale 7% in the second month following sale The following sales are expected: Expected Sales January$115,000 February$150,000 March$130,000 Cash collections in March should be budgeted to be:

Answer 1

The cash collections in March is budgeted to be $135050

Step-by-step explanation:

The collection of cash in March will consist of cash received for 7% of January's sales, 50% of February sales and 40% of Marc's sales. We assume that all the sales mentioned are credit sales and apply these percentages on the whole amount of sales given for each month.

Cash collection in March = 0.07 * 115000 + 0.5 * 150000 + 0.4 * 130000

Cash collection March = $135050