Question

The managerial accountant at Hill’s Development Services expects to collect 30% of its credit sales in the month after the sale and 40% two months after the sale. Assume credit sales in December were $100,000 and November sales were $90,000. November credit sales $90,000 December credit sales $100,000 What is the anticipated cash collection of credit sales for January?

Answer 1

Answer:

$66,000

Explanation:

40% of Hill's November sales will be collected in January: $90,000 x 40% = $36,000.

30% of Hill's December sales will be collected in January: $100,000 x 30% = $30,000.

The total amount that should be collected in January including both November and December sales is $66,000 (= $36,000 + $30,000).