Answer:
Total cash collection= $1,053,200
Explanation:
Giving the following information:
Sales:
April $970,000
May $1,070,000
June $1,120,000
Cash sales are normally 20% of total sales. <u>Of the credit sales,</u> 40% are collected in the same month as the sale, 55% are collected during the first month after the sale, and the remaining 5% are not collected.
<u>To calculate the total cash collection for June, we need to use the following structure:</u>
Cash collection June:
Sales in cash from June= (1,120,000*0.2)= 224,000
Sales in account from June= (1,120,000*0.8)*0.4= 358,400
Sales in account from May= (1,070,000*0.8)*0.55= 470,800
Total cash collection= $1,053,200
