Question

3. Kramerica Inc. has forecast sales to be $600,000 in January, $480,000 in February, $500,000 in March and $620,000 in April. Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month. What are budgeted cash collections for April? A. $598,400 B. $248,000 C. $508,400 D. $350,400

Answer 1

Answer:

Total cash collection= $598,400

Explanation:

Giving the following information:

Sales ($):

January= $600,000

February= $480,000

March= $500,000

April= $620,000

Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month.

Cash collection April:

Sales in cash= (620,000*0.40)= 248,000

Sales on account:

From April= (620,000*0.6)*0.7= 260,400

From March= (500,000*0.6)*0.3= 90,000

Total cash collection= $598,400