Question

Begin operation in September. It has budgeted August sales $73,000, September sales $76,000, October sales $79,000, November sales of $83,000 and December sales $81,000. 15% of each sales are cash sales.80% of the balance will be collected in the month following the sales: 15% in the second month, 8% the third month, and the balance is bad debts. What is the amount of cash to be collected in the month of November?

a) $81,554 - b) $79,604 - c) 80,824 - d) 76,451

Answer 1

Answers

• All working forms part of the answer
• Working for Credit Sale

Working		August	Sept	October	November	December
A	Budgeted Sales	$                             73,000.00	$               76,000.00	$                     79,000.00	$                        83,000.00	$        81,000.00
B = A x 15%	Cash Sales [15%]	$                             10,950.00	$               11,400.00	$                     11,850.00	$                        12,450.00	$        12,150.00
C = A - B	Credit Sales	$                             62,050.00	$               64,600.00	$                     67,150.00	$                        70,550.00	$        68,850.00

• Answer calculation

	November
	Amount of Sale	% collected	Amount of Cash collected
Cash Sales	$                             83,000.00	15%	$                     12,450.00
Cash collected from :
August Credit Sale	$                             62,050.00	8%	$                       4,964.00
September Credit Sale	$                             64,600.00	15%	$                       9,690.00
October Credit Sale	$                             67,150.00	80%	$                    53,720.00
November Credit Sale	$                             70,550.00	0%	$                                    -
Total Cash Collected			$                     80,824.00

• Hence, the correct answer is Option ‘C’: $ 80,824