Question

Distribution Corporation collects 60% of a month's sales in the month of sale, 35% in the month following sale, and 5% in the second month following sale. Budgeted sales for the upcoming four months are: April budgeted sales $100.000 May budgeted sales $170,000 June budgeted sales $260,000 July budgeted sales $230,000 The amount of cash that will be collected in July is budgeted to be O A. $138,000 O B. $237,500 OC. $204,500 OD. $99,500

Answer 1

Ans.	Option   B   $237,500
	Particulars	Amount
	From May sales	$8,500
	From June sales	$91,000
	From July sales	$138,000
	Total cash collection in July	$237,500
	Calculation of Cash collections:
		July
	From May sales	$170,000 * 5%
	From June sales	$260,000 * 35%
	From July sales	$230,000 * 60%
	*35% of June month's credit sales and 5% of May month's credit sales will receive in
	the month of July.
	*60% of current month's sales will also receive in July.