Question

Limerick, Inc. has budgeted total sales for January, February, and March of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 40% are collected in the same month as the sale, and 60% are collected during the first month after the sale. Compute the amount of cash received from sales during the month of February.

Answer 1

Answer:

$905,000

Explanation:

February Collection will be as follows :

February Collection = Cash Sales + Credit Sales

                                  =  $900,000 x 25 % + $900,000 x 40 % + $800,000 x 60 %

                                  = $905,000

the amount of cash received from sales during the month of February is $905,000.