Question

Kennedy Enterprises has budgeted sales for the months of September and October at $ 110 comma 000 and $ 170 comma 000​, respectively. Monthly sales are 60​% credit and 40​% cash. Of the credit​ sales, 10​% are collected in the month of sale and 90​% are collected in the following month. What are the October cash collections from​ customers?

Answer 1

The answer is $137,600

Step-by-step explanation:

Budgeted sales for September = $110,000

Budgeted sales for October = $170,000

Credit sales for September:

0.6 x $110,000

$66,000

90% will be collected the following month (October)

0.9 x $66,000

=$59,400.

Credit sales for October:

0.6 x $170,000

$102,000

10% will be collected the same month (October)

0.1 x $102,000

=$10,200

Cash sales in October

0.4 x $170,000

$68,000

The total October cash collections from​ customers is

$59,400 + $10,200 + $68,000

= $137,600