Question

Budgeted sales in Allen Company over the next four months are given below:

Answer 1

Answer:

Cash collections for December should be $103,500

Explanation:              

As a percentage of any sales is usually made on account which is 75%. The cash collection shall be received in categories as follows:                      

Cash collection on account              $

Month of sale

50% × 75%  December Sales =

50% × (100-25)% × 120,000  =       45,000

One month after  sales

30% × 75% ×  November  sales

30% × 75% × 180,000 =                  40,500

2 months after sales

15% × 75% × October sales

15% × 75% × 160,000 =                    18,000

                                                        103,500

Cash collections for December should be $103,500