Question

Bailey Industries expects sales for​ January, February, and March to be​ $220,000, $260,000, and​ $300,000 respectively. It is expected that​ 75% of its sales will be collected in cash during the month of​ sale, and the remaining​ 25% will be collected in the month following the sale. Compute cash collections for Bailey Industries for the month of February. A. ​$225,000 B. ​$290,000 C. ​$300,000 D. ​$250,000

Answer 1

The correct answer is D.

Step-by-step explanation:

Giving the following information:

Sales:

January=$220,000

February= $260,000

It is expected that​ 75% of its sales will be collected in cash during the month of​ sale, and the remaining​ 25% will be collected in the month following the sale.

Cash collection:

From January= 220,000*0.25= 55,000

From February= 260,000*0.75= 195,000

Total cash collection= $250,000