(Question 37): Sparrow Co makes and sells construction materials and has some cash sales and some credit sales. Actual credit sales for the past four months were as follows: February 50,000, March 60,000, April 20,000, May 40,000. 20% of credit sales are expected to pay in the month of sale, 60% in the month after sale, 10% in the second month after sale and 10% are expected to be bad debts. Sparrow Co has budgeted that total sales in August will be $320,000, then $510,000 in September, $130,000 in October and $250,000 in November. 50% of sales are expected to be credit sales. Customers who pay in cash are given a 10% discount. Task 2. Calculate the level of sales receipts that should be shown in the cash budget for October. Select one: a. $235,000 b. $240,500 O c. $221,200 d. $190,000
(Question 37): Sparrow Co makes and sells construction materials and has some cash sales and some credit sales. Actual credit sales for the past four months were as follows: February 50,000, March 60,000, April 20,000, May 40,000. 20% of credit sales are expected to pay in the month of sale, 60% in the month after sale, 10% in the second month after sale and 10% are expected to be bad debts. Sparrow Co has budgeted that total sales in August will be $320,000, then $510,000 in September, $130,000 in October and $250,000 in November. 50% of sales are expected to be credit sales. Customers who pay in cash are given a 10% discount. Task 2. Calculate the level of sales receipts that should be shown in the cash budget for October. Select one: a. $235,000 b. $240,500 O c. $221,200 d. $190,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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H1.
Transcribed Image Text:(Question 37): Sparrow Co makes and sells construction materials and has some
cash sales and some credit sales.
Actual credit sales for the past four months were as follows:
February 50,000,
March 60,000,
April 20,000,
May 40,000.
20% of credit sales are expected to pay in the month of sale, 60% in the month
after sale, 10% in the second month after sale and 10% are expected to be bad
debts.
Sparrow Co has budgeted that total sales in August will be $320,000, then
$510,000 in September, $130,000 in October and $250,000 in November.
50% of sales are expected to be credit sales.
Customers who pay in cash are given a 10% discount.
Task 2. Calculate the level of sales receipts that should be shown in the cash
budget for October.
Select one:
a. $235,000
b. $240,500
O c. $221,200
d. $190,000
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