Question

As of January 1 of the current year, Grackle Company had accounts receivable of $50,000. The sales for January, February, and March were $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. The total cash collected (both from accounts receivable and cash sales) in the month of February is a.$62,400 b.$91,200 c.$129,600 d.$133,600

Answer 1

Answer:

d.$133,600

Explanation:

Credit sales in January= $120,000 x 80% = $96,000

Credit sales in February = $140,000 x 80% = $112,000

Collections from January credit sales ($96,000 x 40%)$38,400

Add: Collections from March credit sales ($112,000 x 60%) $67,200

Add: Cash sales in March ($140,000 x 20%) $28,000

Total collections in February $133,600