ABC Enterprises has budgeted sales for the next four months as follows: Budgeted
ID: 2358776 • Letter: A
Question
ABC Enterprises has budgeted sales for the next four months as follows: Budgeted Sales in Units January 7,400 units February 3,900 units March 5,300 units April 4,600 units ABC's product sells for $20 each. Experiences has shown that 10% of the company's sales are cash sales and 90% of the com,pany's sales are made on account. The sales on account are collected in the pattern 30% in the month of s,ale, 55% in the month following sale, and 15% is collected in the second month following sale. Calculate the total expected cash collections for the month of March.Explanation / Answer
Jan Feb Mar Apr
Sales unit 7400 3900 5300 4600
Sales revenue 148000 78000 106000 92000
Cash sales (10%) 14800 7800 10600 9200
Credit Sales (90%) 133200 70200 95400 82800
Total cash collection on March:
Cash sales in march: $10600
Credit sales in march: 30% x 95400 =$28620
Credit sales in Feb: 55% x 70200 = $39600
Credit sales in Jan: 15% x 133200 = $19980
Total cash collection = 10600 + 28620 + 39600 + 19980 = $98800
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