Complete Question:
Center Company makes collections on sales according to the following schedule:
30% in the month of sale
60% in the month following sale
10% in the second month following sale
The following sales are expected:
Expected Sales
January $ 141,000
February $ 155,000
March $ 146,000
Cash collections in March should be budgeted to be:
A. $146,500.
B. $146,000.
C. $136,800.
D. $150,900.
Answer:
Center Company
Cash collections in March should be budgeted to be:
D. $150,900.
Explanation:
a) Data and Calculations;
January February March
Expected Sales $141,000 $155,000 $146,000
Cash Collections:
30% month of sale 42,300 46,500 43,800
60% following sale 84,600 93,000
10% second month 14,100
Total budgeted cash collections in March $150,900
Cash collections for March:
30% in the month of sale = $43,800 ($146,000 * 30%)
60% in the month following sale = $93,000 ($155,000 * 60%)
10% in the second month following sale = $14,100 ($141,000 * 10%)
