Worthington Company expects that cash sales will be 20% of total sales, credit card sales will be 50% of total sales, and account sales will be 30% of total sales. Credit card sales are collected in the month following the sale, net a 3% credit card fee. This means that if the sale is $100, the credit card company's fee is $3, and Worthington receives $97. Account sales will be collected as follows: 40% in the first month following the sale, 50% in the second month following the sale, 8% in the third month following the sale, and 2% never collected. The following table identifed the projected sales for the first year of operations:
Worthington Company expects that cash sales will be 20% of total sales, credit card sales will be 50% of total sales, and account sales will be 30% of total sales. Credit card sales are collected in the month following the sale, net a 3% credit card fee. This means that if the sale is $100, the credit card company's fee is $3, and Worthington receives $97. Account sales will be collected as follows: 40% in the first month following the sale, 50% in the second month following the sale, 8% in the third month following the sale, and 2% never collected. The following table identifed the projected sales for the first year of operations:
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 1P
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