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A company's history indicates that 25% of its sales are for cash and the rest are...

A company's history indicates that 25% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, and 20% the following month. Projected sales for January, February, and March are $64,000, $89,000 and $99,000, respectively. The March expected cash receipts from current and prior credit sales is:

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Answer #1

Answer : The March expected cash receipts from current and prior credit sales is = $57825

Calculated as

Collections from prior sales in March = 50% of February sales + 20% of January credit sale + 20% of March Credit sale

Collection from Credit sales
Credit Sale x collections % = Collections
For January 48000 x 20% = $9600
For February 66750 x 50% = $33375
For March 74250 x 20% = $14850
Collection from Credit sales 57825

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