All of Gaylord Company\'s sales are on account. Thirty-five percent of the credi
ID: 2528443 • Letter: A
Question
All of Gaylord Company's sales are on account. Thirty-five percent of the credit sales are collected in the month of sale, 45% in the month following sale, and rhe rest are collected in the second month following sale. Bad debts are negligible and should be ignored. The following are budget sales data for the company:
January
February
March
April
Total sales………
$50,000
$60,000
$40,000
$30,000
What is the amount of cash that should be collected in March?
$39,000
$37,000
$27,500
$51,000
January
February
March
April
Total sales………
$50,000
$60,000
$40,000
$30,000
Explanation / Answer
Cash collections in March=(0.35*March sales)+(0.45*February sales)+(0.2*January sales)(Balance=(100-35-45)=20%)
=(0.35*$40000)+(0.45*$60000)+(0.2*$50000)
which is equal to
=$51000.