Question

Fanatics Company is preparing monthly cash budgets for the first quarter of the year. Monthly sales revenue in this quarter is estimated as follow: January, $18,500; February, $16,000; March, $11,000. All sales are made on open credit with 70% collected in the month of sales and 30% collected in the following month. What is estimated cash collected in February and March

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Sales:

January= $18,500

February= $16,000

March= $11,000.

All sales are made on open credit with 70% collected in the month of sales and 30% collected in the following month.

Cash collection= sales for the month*0.7 + cash from the month before

February:

From february= 16,000*0.7= $11,200

From January= 18,500*0.3= $5,550

Total= $16,750

March:

From March= 11,000*0.7= $7,700

From February= 16,000*0.3= $4,800

Total= $12,500