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16 February, 15:59

A company began its operations on April 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for April, May, and June. The company expects to sell 50% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 40% in the month following the sale. The budgeted cash collections in May are:

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  1. 16 February, 16:11
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    Total cash collection May = $306,000

    Explanation:

    Giving the following information:

    Sales:

    April = $250,000

    May = $320,000

    June = $410,0000

    The company expects to sell 50% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 40% in the month following the sale.

    Cash collection May:

    Sales on cash May = 320,000*0.5 = 160,000

    Sales on Account May = (160,000*0.6) = 96,000

    Sales on Account April = (250,000*0.5) * 0.4 = 50,000

    Total cash collection May = $306,000
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