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12 June, 07:33

dit sales of $42,000 and $68,000, respectively. The company expects to collect 60% of its credit sales in the month of the sale, 35% in the following month, and 5% is deemed uncollectible. What amount of cash collections from credit sales would the company include in its cash budget for the second month

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  1. 12 June, 09:00
    0
    Amount of cash collections from credit sales would the company include in its cash budget for the second month is $55,500

    Explanation:

    The amount of cash collections from credit sales in the second month = 60% x credit sales in the second month + 35% x credit sales in the first month.

    The company has credit sales in the first and the second month of of $42,000 and $68,000, respectively.

    The amount of cash collections from credit sales in the second month = 60% x $68,000 + $42,000 x 35% = $55,500
  2. 12 June, 09:27
    0
    cash collections from credit sales that the company will include in its cash budget for the second month is $55,500

    Explanation:

    Second Month Cash Collections will include the following Cash flows:

    (1) 60% of the 2nd month's sales

    (2) 35 % of the 1st month's sales

    Therefore cash collections from credit sales:

    (1) 60% of the 2nd month's sales ($68,000*60%) = $40,800

    (2) 35 % of the 1st month's sales ($42,000 * 35 %) = $14,700

    Total cash collections = $55,500
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