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16 March, 18:27

3. Kramerica Inc. has forecast sales to be $600,000 in January, $480,000 in February, $500,000 in March and $620,000 in April. Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month. What are budgeted cash collections for April? A. $598,400 B. $248,000 C. $508,400 D. $350,400

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  1. 16 March, 18:52
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    Total cash collection = $598,400

    Explanation:

    Giving the following information:

    Sales ($):

    January = $600,000

    February = $480,000

    March = $500,000

    April = $620,000

    Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month.

    Cash collection April:

    Sales in cash = (620,000*0.40) = 248,000

    Sales on account:

    From April = (620,000*0.6) * 0.7 = 260,400

    From March = (500,000*0.6) * 0.3 = 90,000

    Total cash collection = $598,400
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