Question

Oakton Furniture provided the following information relevant to its sales for December Year 1 and the first quarter of Year 2: Dec. Year 1 Jan. Year 2 Feb. Year 2 Mar. Year 2 (Actual) (Budgeted) (Budgeted) (Budgeted) Credit sales $ 59,000 $ 139,000 $ 154,000 $ 109,000 Cash sales $ 10,000 $ 24,000 $ 29,000 $ 11,000 Based on the company's collection history, 43% of credit sales are collected in month of sale and the remainder is collected in the following month. Cash collections in January from December credit sales would be:

Answer 1

Answer:

$33,630

Explanation:

Given that the company's collection history shows that 43% of credit sales are collected in month of sale and the remainder (57%) is collected in the following month then, in the month of January, Cash collections in January from December credit sales would be equivalent to 57% of December Credit sales. Using the actual figures,

Cash collections in January from December credit sales would be

= 57% * 59,000

= $33,630