Question

A 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 is never collected. Budgeted credit sales were: January $320000 February 176000 March 500000 The cash inflow in the month of March is expected to be

Answer 1

Answer:

Total cash collection= $368,800

Explanation:

Giving the following information:

A company's 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.

Credit sales:

January $320,000

February $176,000

March $500,000

Cash collection March:

Sales in account January= (320,000*0,05)= 16,000

Sales in account February= (176,000*0.30)= 52,800

Sales in account March= (500,000*0.6)= 300,000

Total cash collection= $368,800