Question

Frankie's Chocolate Co. reports the following information from its sales budget: Expected Sales: July $ 90,000 August 110,000 September 120,000 Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:

Answer 1

Answer:

$112,500

Explanation:

Th cash collected for each month will include 25% of the sales for the month and 75% of the sales from the previous month given that Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale.

Hence cash collection for September will include 75% sales made in August.

The total amount of cash expected to be received from customers in September

= (25% × $ 120,000) + (75% × $110,000)

= $30,000 + $82,500

= $112,500

Answer 2

Answer:

$112,500

Explanation:

                                                 July       August         September  October

Credit Sales(90000*75%)       67,500  

                   (110,000*75%)                       82,500

                   (120,000*75%)                                          90,000

Cash Sales (120,000*25%                                            30,000

Total Cash expected to be collected in September will be;

Credit Sales of August      $82,500

Cash  Sales of September $30,000

Total cash expected to be collected in September =$112,500