The following credit sales are budgeted by Terra Co.: January $204,000 February 300,000 March 420,000 April 360,000The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April isa) 336,000b) 360,000c) 352,800d) 370,320

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Cantu

Business

28 August, 09:32

The following credit sales are budgeted by Terra Co.: January $204,000 February 300,000 March 420,000 April 360,000The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April isa) 336,000b) 360,000c) 352,800d) 370,320

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Geovanni Pope · Answer 1

The correct answer is B.

Explanation:

Giving the following information:

February = 300,000

March = 420,000

April = 360,000

The company's experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale.

Cash collection:

From February = (300,000*0.08) = $24,000

From March = (420,000*0.2) = 84,000

From April = 360,000*0.7 = 252,000

Total = $360,000