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23 September, 08:54

Fanatics Company is preparing monthly cash budgets for the first quarter of the year. Monthly sales revenue in this quarter is estimated as follow: January, $18,500; February, $16,000; March, $11,000. All sales are made on open credit with 70% collected in the month of sales and 30% collected in the following month. What is estimated cash collected in February and March

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  1. 23 September, 09:12
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    Instructions are below.

    Explanation:

    Giving the following information:

    Sales:

    January = $18,500

    February = $16,000

    March = $11,000.

    All sales are made on open credit with 70% collected in the month of sales and 30% collected in the following month.

    Cash collection = sales for the month*0.7 + cash from the month before

    February:

    From february = 16,000*0.7 = $11,200

    From January = 18,500*0.3 = $5,550

    Total = $16,750

    March:

    From March = 11,000*0.7 = $7,700

    From February = 16,000*0.3 = $4,800

    Total = $12,500
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