3. Kramerica Inc. has forecast sales to be $600,000 in January, $480,000 in February, $500,000 in March and $620,000 in April. Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month. What are budgeted cash collections for April? A. $598,400 B. $248,000 C. $508,400 D. $350,400

Question

Business

Katelyn

20 June, 05:38

3. Kramerica Inc. has forecast sales to be $600,000 in January, $480,000 in February, $500,000 in March and $620,000 in April. Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month. What are budgeted cash collections for April? A. $598,400 B. $248,000 C. $508,400 D. $350,400

+3

Answers (1)

Know the Answer?

Griffin Fritz · Answer 1

Total cash collection = $598,400

Explanation:

Giving the following information:

Sales ($):

January = $600,000

February = $480,000

March = $500,000

April = $620,000

Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month.

Cash collection April:

Sales in cash = (620,000*0.40) = 248,000

Sales on account:

From April = (620,000*0.6) * 0.7 = 260,400

From March = (500,000*0.6) * 0.3 = 90,000

Total cash collection = $598,400