Question

The Most Brilliant Professor Mullen Company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder (5%) is never collected. Budgeted credit sales were: January $240,000 February 144,000 March 360,000 The cash inflow (CRJ) in the month of March is expected to be A) $271,200. B) $205,200. C) $216,000. D) $259,200.

Answer 1

Answer: A. $271,200

Explanation:

Cash inflow in March will be:

= (60% * March sales) + (30% * February sales) + (5% * January sales)

= (60% * 360,000) + (30% * 144,000) + (5% * 240,000)

= 216,000 + 43,200 + 12,000

= $271,200