Question

All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale. The following are budgeted sales data for the company: January February March April Total sales $50,000 $60,000 $40,000 $30,000 What is the amount of cash that should be collected in March

Answer 1

Answer:

$51,000

Explanation:

Given that,

Budgeted sales:

January = $50,000

February = $60,000

March = $40,000

April = $30,000

45% in the month following sale

35% of the sales on account are collected in the month of sale

Remainder are collected in the second month following sale.

Therefore,

Amount of cash that should be collected in March:

= (20% of January sales) + (45% of February sales) + (35% of March sales)  

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

= $51,000