Question

Alpha Company makes all its sales on account. The accounts receivable payment experience is as follows: Percent paid in the month of sale 35% Percent paid in the month after the sale 54% Percent paid in the second month after the sale 6% Alpha provided the following information on sales: May $150,000 June $125,000 July $136,000 August (expected) $142,000 How much of June's credit sales is expected to be collected in the month of July

Answer 1

$67,500

Step-by-step explanation:

Data provided as per the requirement of expected cash collection in July is shown below:-

June sales = $125,000

Percent paid in the month after the sale = 54%

The computation of expected cash collection in July is shown below:-

Expected cash collection in July = June sales × Percent paid in the month after the sale

= $125,000 × 54%

= $67,500

Therefore for computing the expected cash collection in July we simply applied the above formula.