Question

Noterman Company has credit sales of $600,000 in January. Past experience suggests that 40% is collected in the month of sale, 50% in the month following the sale, and 10% in the second month following the sale. Compute the cash collections from January sales in January, February, and March.

Answer 1

Answer:

Cash collected in January = $240000

Cash collected in February = $30000

Cash collected in march = $10000

Explanation:

We have given that Noteman company has credit sales of January = $60000

It is given that 40% is collected in the month of sale

So cash collected in January $=\frac{600000\times 40}{100}= 240000$

Cash collected in February $=\frac{600000\times 50}{100}= 30000$

Cash collected in march = $=\frac{600000\times 10}{100}= 10000$