Question

​Thornton, Inc. has budgeted sales for the months of September and October at $ 302 comma 000 and $ 264 comma 000​, respectively. Monthly sales are 80​% credit and 20​% cash. Of the credit​ sales, 50​% are collected in the month of​ sale, and 50​% are collected in the following month. Calculate cash collections for the month of October. A. $ 279 comma 200 B. $ 181 comma 200 C. $ 286 comma 800 D. $ 158 comma 400

Answer 1

Answer:

A) $279,200

Explanation:

September sale: 302,000, 80% paid on credit which is  = 80% x 302,000 = 241,600, of which 50% are collected in the following month (October), which is equal to 241,600 x 50% = $120,800

October sale = 264,000

20% paid on cash, which is = 20% x 264,000 = 52,800

80% paid on credit and 50% of which is collected in the month of sale (October) = 80% x 50% x 264,000 = $105,600

Total cash collections for October = 120,800 + 52,800 + 105,600 = $279,200