Question

A Company collects 20% of a month’s sales in the month of sale, 70% in the month following sale, and 6% in the second month following sale. The remainder is uncollectible. Budgeted sales for the next four months are: Cash collections in April are budgeted to be:

Budgeted sales January $200,000 February $300,000 March $350,000 April $250,000

A) $313,000

B) $292,000

C) $321,000

D) $320,000

Answer 1

Correct Answer:

Option: $ 313,000

Working:

Cash collection budget
For the month of April
April sales collection	20% in the month of sale (20% * 250000 )	$             50,000
March Sales collection	70% in the month following sale ( 70% * 350,000)	$         2,45,000
February sales collection	6% in the second month following sale (6% * 300,000 )	$             18,000
Total Budgeted cash collection		$         3,13,000

End of Answer.                                                                                                                             

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