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16. The Model Company is to begin operations in April. It has budgeted April sales of...

16.

The Model Company is to begin operations in April. It has budgeted April sales of $38,000, May sales of $42,000, June sales of $48,000, July sales of $50,000, and August sales of $46,000. Note that 10% of each month's sales is expected to represent cash sales; 75% of the balance is expected to be collected in the month following the sale, 17% the second month, 6% the third month, and the balance is expected to be uncollectible.

What is the amount of cash to be collected in the month of July?

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Answer #1

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Total collection in july   $ 45,878.00

Working

July cash sales $    5,000.00
Collection of june credit sales (43200 x 75%) $ 32,400.00
Collection of May credit sales (37800 x 17%) $    6,426.00
Collection of April credit sales (34200 x 6%) $    2,052.00
Total collection in july   $ 45,878.00

.

April May June July August
Total sales $ 38,000.00 $ 42,000.00 $ 48,000.00 $ 50,000.00 $ 46,000.00
Cash sales $    3,800.00 $    4,200.00 $    4,800.00 $    5,000.00 $    4,600.00
Credit sales $ 34,200.00 $ 37,800.00 $ 43,200.00 $ 45,000.00 $ 41,400.00
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