Question

Assume Durango Co. had sales of $200,000 for the month of November. Sales are expected to grow 10% each month. The company collects 60% of sales in the month of sale and 40% in the month after sale. Projected cash collections for December total ______.

Answer 1

The cash collections of Durango Co. for the month of December over such given number of sales will be $212,000.

What is cash collection?

The total amount of receivables actually received by a business during a given financial period is regarded as the cash collection of the firm for such period.

Now, in the above given situation, the 40 percent cash collection amounting to $80000 from the month of November will be collected in the current month. Solving further,

$\rm Cash\ Collection\ = Total\ Sales\ x\ \dfrac{Pecentage}{100}\\\\\rm Cash\ Collection\ = 220,000 x\ \dfrac{60}{100}\\\\\rm Cash\ Collection\ = \ 132,000$

So, in total the cash collection for the month of December will be computed as, 80000+132,000=$212,000.

Hence, the cash collection of Durango Co. is aforementioned.

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