As of January 1 of the current year, Phyllis Company had accounts receivable of $50,000. The sales for January, February, and March were $120,000, $140,000, and $160,000, respectively. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of March?

Question

Cherish Boone

Business

29 July, 23:53

As of January 1 of the current year, Phyllis Company had accounts receivable of $50,000. The sales for January, February, and March were $120,000, $140,000, and $160,000, respectively. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of March?

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Matthew Munoz · Answer 1

The total cash collected in March will be = $153600

Explanation:

The collection for the month of March will include 20% amount of total sales for March which were the cash sales, 60% of the amount collected for March's credit sales and 40% amount of February's credit sales.

The cash sales for March were = 160000 * 0.2 = $32000

The credit sales for March were = 160000 - 32000 = $128000

Of this 128000, 60% will be collected in March = 128000 * 0.6 = $76800

The receivables for the February credit sales that will be collected in March are = (140000 * 0.8) * 0.4 = $44800

The total cash collected in March will be = 32000 + 76800 + 44800

The total cash collected in March will be = $153600