Question

A company began its operations on April 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for April, May, and June. The company expects to sell 50% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 40% in the month following the sale. The budgeted cash collections in May are:

Answer 1

Answer:

Total cash collection May= $306,000

Explanation:

Giving the following information:

Sales:

April= $250,000

May= $320,000

June= $410,0000

The company expects to sell 50% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 40% in the month following the sale.

Cash collection May:

Sales on cash May= 320,000*0.5= 160,000

Sales on Account May= (160,000*0.6)= 96,000

Sales on Account April= (250,000*0.5)*0.4= 50,000

Total cash collection May= $306,000