Question

Pitkins 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:


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

Required:
What are the budgeted Cash collections for April?

Answer 1

Answer:

Total sales collection= $313,000

Explanation:

Giving the following information:

Cash collection:

20% of a month's sales in the month of sale

70% in the month following sale

6% in the second month following sale.

January February March April

$200,000 $300,000 $350,000 $250,000

Cash collection April:

Cash from sales in Arpil= (250,000*0.2)= 50,000

Sales on account March= (350,000*0.7)= 245,000

Sales on account February= (300,000*0.06)= 18,000

Total sales collection= $313,000