Question

Pigskin Inc. produces and sells leather handbags. Sales are 40% in cash and 60% on account. Cash from sales on account is collected 50% in the month of sale and 50% in the month following. In February, Pigskin has total sales revenue of $160,000 and total cash collections of $172,000. Compute the total sales revenues for the month of January. Group of answer choices $200,000 $220,000 $60,000 $120,000 None of the other answers are correct

Answer 1

Answer:

None of the other answers are correct

Explanation:

February Data is given as :

Total Sales Revenue = $160,000

Total Cash Collections =  $172,000

Thus the using the February Total Credit Sales in January will be

40 % = February Cash Collection

         = $172,000 × 40%

         = $68,800

50 % of remainder = February credit sales collection

                                = (172,000 - 68,800) × 50%

                                = $51,600

50 % of remainder = January credit sales collection

                                = (172,000 - 68,800) × 50%

                                = $51,600

Then January Credit Sales will be : $51,600 × 2 = $103,200

But this is only 60 % of the total sales.

The full 100 % will be : 100 % / 60 % × $103,200 = $172,000

Therefore,

Using this data give None of the other answers are correct