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13 June, 21:54

Avril Company makes collections on sales according to the following schedule: 40% in the month of sale 56% in the month following sale 4% in the second month following sale The following sales have been are expected: Expected Sales January $210,000 February $160,000 March $150,000 Budgeted cash collections in March should be budgeted to be:

a. $150,840

b. $149,600

c. $150,000

d. $158,000

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Answers (2)
  1. 13 June, 22:05
    0
    d. $158,000

    Explanation:

    Considering the company's cash collection pattern; 40% in the month of sale 56% in the month following sale 4% in the second month following sale, Cash collection in March would be made up of;

    4% of sales in January 56% of sales in February 40% of sales in March

    As such, Budgeted cash collections in March should be budgeted to be:

    = 4% * $210,000 + 56% * $160,000 + 40% * $150,000

    = $8400 + $89600 + $60000

    = $158,000
  2. 13 June, 22:14
    0
    Total cash collection = $158,000

    Explanation:

    Giving the following information:

    40% in the month of sale

    56% in the month following sale

    4% in the second month following sale

    Sales:

    January $210,000

    February $160,000

    March $150,000

    Cash collection:

    From March = 150,000*0.4 = 60,000

    From February = 160,000*0.56 = 89,600

    From March = 210,000*0.04 = 8,400

    Total cash collection = $158,000
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