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12 August, 10:28

All of Pocast Corporation's sales are on account. Sixty percent of the credit sales are collected in the month of sale, 30% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company: January February March AprilTotal sales $700,000 $500,000 $400,000 $600,000Cash receipts in April are expected to be:a. $530,000b. $410,000c. $460,000d. $360,000

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  1. 12 August, 10:57
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    Option (a) $530,000

    Explanation:

    Data provided in the question:

    Sales collected in the month of sale = 60% of the credit sales

    Sales collected in the following month = 30%

    Sales collected in the second month = 10%

    Month January February March April

    Total sales $700,000 $500,000 $400,000 $600,000

    Now,

    Cash receipts in April

    = (60% of April sales) + (30% of March sales) + (10% of February sales)

    = (0.6 * $600,000) + (0.3 * $400,000) + (0.1 * $500,000)

    = $360,000 + $120,000 + $50,000

    = $530,000

    hence,

    Option (a) $530,000
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