Question

All of Pocast Corporation's sales are on account. Sixty percent of the credit sales are collected in the month of sale, 30% in the month following sale, and 10% in the second month following sale. The following are budgeted sales data for the company:

	January			February			March			April
Total sales	$	700,000		$	500,000		$	400,000	$	600,000

Cash receipts in April are expected to be:

$530,000

$410,000

$460,000

$360,000

Answer 1

Cash receipts in April=(60%*April sales)+(30%*March sales)+(0.1*February sales)

=(0.6*600,000)+(0.3*400,000)+(0.1*500,000)

which is equal to

=530,000.