On average, 35% of the sales on account are collected in the month of sale, 40% are collected in the month following sale, 10% are collected in the second month following sale, and the remaining 15% is collected three months after the month of sale. Calculate the expected cash collections for April.

Question: Your question is incomplete. Below is the complete question and the answer.

Shown below are the budgeted sales for ABC Company for the next six months:

Sales for Cash Sales on Account

January $15,000 $ 70,000

February $18,000 $ 80,000

March $14,000 $160,000

April $26,000 $120,000

May $18,000 $170,000

June $24,000 $105,000

On average, 35% of the sales on account are collected in the month of sale,

40% are collected in the month following sale, 10% are collected in the

second month following sale, and the remaining 15% is collected three months

after the month of sale.

1. Calculate the expected cash collections for April.

Answer:

The expected cash collections for April is $150,500

Explanation:

ABC Company

Expected cash collections for April

April cash collection

Cash sales $26,000

January sales collected April $10,500

70,000 x 15%

February sales collected in April $8,000

80,000 x 10%

March sales collected in April $64,000

160,000 x 40%

April sales collected in April $42,000

120,000 x 35%

Total cash collections $150,500

35% of sales (say $2,000,000) in April

$700,000

Explanation:

Step one:

Assuming that the sales made for April is $2,000,000

According to the conditions in which money is collected 35% of sales made for a month is collected for the month

For april the expected amount

=35/100*2,000,000

=$700,000