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12 August, 17:32

ABC Company expects the following sales and collection pattern for the last 4 months of the year. Month Cash Sales Credit Sales Total Sales September $25,000 $65,000 $90,000 October $28,000 $72,000 $100,000 November $26,000 $68,000 $94,000 December $30,000 $71,000 $101,000 • 5% of credit sales are collected in the same month. • 65% of sales are collected in the following month. • 25% of sales are collected in the second following month. What are the projected cash collections for the month of December?

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  1. 12 August, 19:14
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    The projected cash collections for the month of December is $ 65,750.

    Explanation:

    Projected cash flows for the month of December = 25% of october credit sales + 65% of November credit sales

    5% of December credit sales

    = (72000*25%) + (68000*65%) + (71000*5%)

    = $ 65,750.

    Total percentage as per given question, is only 95% but not 100%.

    Also, credit sales collections upto second following month of Actual date of sale. So, september month sale is not considered.
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