Question

Distribution Corporation collects 40% of a month's sales in the month of sale, 55% in the month following sale, and 5% in the second month following sale. Budgeted sales for the upcoming four months are:April budgeted sales $100,000May budgeted sales $150,000June budgeted sales $230,000July budgeted sales $180,000The amount of cash that will be collected in July is budgeted to beA) $72,000.B) $179, 500.C) $206,000.D) $195, 500.

Answer 1

C) $206,000.

Step-by-step explanation:

The budgeted amount of cash that will be collected in July can be obtained adding the amount due to be collected in July. This can be estimated as follows:

Budgeted cash from May budgeted sales = $150,000 * 5% = $7,500

Budgeted cash from June budgeted sales = $230,000 * 55% = $126,500

Budgeted cash from July budgeted sales = $180,000 * 40% = $72,000

By adding all the above together, we have:

July budgeted cash collection = $7,500 + $126,500 + $72,000 = $206,000

Therefore, the amount of cash that will be collected in July is budgeted to be $206,000.