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2 February, 00:03

17. Flanders Industries collects 35% of its sales on account in the month of the sale and 65% in the month following the sale. If sales on account are budgeted to be $175,000 for May and $225,000 for June, what are the budgeted cash receipts from sales on account for June?

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  1. 2 February, 00:20
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    The correct answer is $192,500.

    Explanation:

    According to the scenario, the given data are as follows:

    Cash collected for current month of May = $175,000 * 35% = $61,250

    Cash collected For current month of June = $225,000 * 35% = $78,750

    For the next month of May (June) = $175,000 * 65% = $113,750

    For the next month of June (July) = $225,000 * 65% = $146,250

    So, we can calculate the receipt from sales by using following formula:

    Total sales = Cash collected For current month of June + For the next month of May (June)

    = $78,750 + $113,750

    = $192,500

    Hence, the budgeted cash receipts from sales on account for June is $192,500.
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