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You collect 80% of each month's sales in one month following the sale and 20%, the remainder, two months following the sale. If your sales are budgeted to be: February $120,000 March $140,000 What would be your amount for cash collected from customers in March? January $100,000

You collect 80% of each month's sales in one month following the sale and 20%, the remainder, two months following the sale. If your sales are budgeted to be: February $120,000 March $140,000 What would be your amount for cash collected from customers in March? January $100,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Math Problem - Cash Collection Schedule** **Question 31** You collect 80% of each month's sales in one month following the sale and 20%, the remainder, two months following the sale. If your sales are budgeted to be: | | January | February | March | |-------|---------|----------|-------| | Sales | $100,000 | $120,000 | $140,000 | **What would be your amount for cash collected from customers in March?** - **80% Collection Explanation**: This represents the proportion of sales collected the month immediately following the sale month. - **20% Collection Explanation**: This represents the proportion of sales collected two months after the sale month. To solve this: 1. **Collection from January Sales in March**: - 20% of January sales is collected in March. - January sales: $100,000. - 20% of $100,000: 0.20 * $100,000 = $20,000. 2. **Collection from February Sales in March**: - 80% of February sales is collected in March. - February sales: $120,000. - 80% of $120,000: 0.80 * $120,000 = $96,000. 3. **Collection from March Sales in April**: - Since collection happens in the month following the sale, March collections will be 80% in April and remaining 20% in May. Adding all collections from January and February provides total cash collections for March: **Total Collections in March = January’s 20% collection + February’s 80% collection** **Total Collections in March = $20,000 + $96,000 = $116,000** **Answer:** For cash collected from customers in March, the amount is **$116,000**.
Transcribed Image Text:**Math Problem - Cash Collection Schedule** **Question 31** You collect 80% of each month's sales in one month following the sale and 20%, the remainder, two months following the sale. If your sales are budgeted to be: | | January | February | March | |-------|---------|----------|-------| | Sales | $100,000 | $120,000 | $140,000 | **What would be your amount for cash collected from customers in March?** - **80% Collection Explanation**: This represents the proportion of sales collected the month immediately following the sale month. - **20% Collection Explanation**: This represents the proportion of sales collected two months after the sale month. To solve this: 1. **Collection from January Sales in March**: - 20% of January sales is collected in March. - January sales: $100,000. - 20% of $100,000: 0.20 * $100,000 = $20,000. 2. **Collection from February Sales in March**: - 80% of February sales is collected in March. - February sales: $120,000. - 80% of $120,000: 0.80 * $120,000 = $96,000. 3. **Collection from March Sales in April**: - Since collection happens in the month following the sale, March collections will be 80% in April and remaining 20% in May. Adding all collections from January and February provides total cash collections for March: **Total Collections in March = January’s 20% collection + February’s 80% collection** **Total Collections in March = $20,000 + $96,000 = $116,000** **Answer:** For cash collected from customers in March, the amount is **$116,000**.
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