Question

Camellia, a merchandising company, has provided the following extracts from their budget for the first quarter of the forthcoming year: 500,000

Answer 1

Hi, the question is incomplete, here is the complete exercise:

Camellia, a merchandising company, has provided the following extracts from their budget for the first quarter of the forthcoming year:

                               Jan              Feb              March

Sales (20% cash)   $500,000   $750,000   $1,000,000

The company collects 70% of credit sales in the same month and the balance in the next month. Calculate the collections from the customers for the month of February.

A) $570,000

B) $540,000

C) $690,000

D) $750,000

Answer:

C) $690,000

Explanation:

Budget for cash sales in february:

$750,000 x 20% = $150,000

Budget for credit sales:

For february sales:

$750,000 x 80% x 70% = $420,000

For January sales:

$500,000x 80% x 30% = $120.000

Total Cash budget = $690,000