Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the month following sale, and 6% in the second month following sale. The remainder is uncollectible. Budgeted sales for the next four months are: Cash collections in April are budgeted to be: Select one: a. $321,000 b. $313,000 c. $320,000 d. $292,000

Question

Hamlet

Business

11 March, 08:10

Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the month following sale, and 6% in the second month following sale. The remainder is uncollectible. Budgeted sales for the next four months are: Cash collections in April are budgeted to be: Select one: a. $321,000 b. $313,000 c. $320,000 d. $292,000

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Marco Bird · Answer 1

Instructions are below.

Explanation:

Giving the following information:

Cash collection = 20% of a month's sales in the month of sale

Account sales = 70% in the month following sale, and 6% in the second month following sale.

The remainder is uncollectible.

We weren't provided with information regarding sales. I can invent some numbers to show how it's done.

Sales:

February = 200,000

March = 188,000

April = 213,000

Cash collection:

Sales in cash April = (213,000*0.2) = 42,600

Sales on Account March = (188,000*0.7) = 131,600

Sales on Account February = (200,000*0.06) = 12,000

Total cash April = $186,200