Question

Two Brothers Moving prepared the following sales budget:
Month Cash Sales Credit Sales
March $20,000 $10,000
April $36,000 $16,000
May $42,000 $40,000
June $54,000 $48,000
Credit collections are 25% in the month of sale, 60% in the month following the sale, and 10% two months following the sale. The remaining 5% is expected to be uncollectible. What are the total cash collections in May at Two Brothers Moving?
A) $62, 600
B) $20, 600
C) $65,000
D) $76, 100

Answer 1

Answer:

Total cash collection= $62,600

Explanation:

Giving the following information:

Month Cash Sales Credit Sales

March $20,000 $10,000

April $36,000 $16,000

May $42,000 $40,000

Credit collections are 25% in the month of sale, 60% in the month following the sale, and 10% two months following the sale.

Cash collection May:

Sales in cash May= 42,000

Sales on account May= (40,000*0.25)= 10,000

Sales on account April= (16,000*0.6)= 9,600

Sales on account March= (10,000*0.1)= 1,000

Total cash collection= $62,600