Question

Center Company makes collections on sales according to the following schedule: Cash collections in March should be budgeted to be:

Answer 1

Complete Question:

Center Company makes collections on sales according to the following schedule:

 

30% in the month of sale

60% in the month following sale

10% in the second month following sale

The following sales are expected:

Expected Sales

January $ 141,000  

February $ 155,000  

March $ 146,000  

 

Cash collections in March should be budgeted to be:

A. $146,500.

B. $146,000.

C. $136,800.

D. $150,900.

Answer:

Center Company

Cash collections in March should be budgeted to be:

D. $150,900.

Explanation:

a) Data and Calculations;

                                  January       February       March

Expected Sales        $141,000      $155,000    $146,000

Cash Collections:

30% month of sale     42,300         46,500        43,800

60% following sale                          84,600        93,000

10% second month                                               14,100

Total budgeted cash collections in March    $150,900

Cash collections for March:

30% in the month of sale = $43,800 ($146,000 * 30%)

60% in the month following sale = $93,000 ($155,000 * 60%)

10% in the second month following sale = $14,100 ($141,000 * 10%)