Question

Budgeted sales in Acer Corporation over the next four months are given below: September October November December Budgeted sales $140,000 $150,000 $170,000 $130,000Twenty-five percent of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections for December should be: $119,500 $98,125 $136,375 $103,875

Answer 1

Answer:

total cash collection during December = $136375

Explanation:

given data

September Budgeted sales = $140,000

October Budgeted sales = $150,000

November Budgeted sales = $170,000

December Budgeted sales = $130,000

cash = 25 %

account = 75%

to find out

cash collections for December should be

solution

we get here cash collection during december  as

first we get here for cash sale that is

cash sale = 25 % of $130000 = $32500   .........................1

and we get collection from credit sales that is for every month

sale for October = 15% × 75% × $150,000   =   $16875    ..............2

sale for November = 30% × 75% × $170,000 = $38250   ................3

sale for December = 50% × 75% × $130,000  = $48750   ...............4

so total cash collection during December = add equation 1 + 2 + 3 +  4

total cash collection during December = $32500 + $16875 + $38250 +$48750

total cash collection during December = $136375