Question

All of Gaylord Company's sales are on account. Thirty-five percent of the credit sales are collected in the month of sale, 45% in the month following sale, and the rest are collected in the second month following sale. Bad debts are negligible and should be ignored. The following are budgeted sales data for the company: What is the amount of cash that should be collected in March? Select one: a. $39,000 b. $37,000 c. $27,500 d. $51,000

Answer 1

Answer: d. $51,000

Explanation:

In March the following will be collected as per the method of collection for Gaylord Company.

1. 35% of sales in March

2. 45% of sales in February

3. 100% - 35% - 45% = 20% of sales in January.

= (35% * 40,000) + (45% * 60,000) + (20% * 50,000)

= 14,000 + 27,000 + 10,000

= $51,000

I have attached the missing part of the question.