Quattro began operations in April of this year. It makes all sales on account, s
ID: 2569214 • Letter: Q
Question
Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 20% are collected in the month of sale; 50% are collected in the first month after sale; and 30% are collected in the second month after sale. If sales for April, May, and June were $50,000, $70,000, and $60,000, respectively, what were the firm's budgeted collections for April?
$10,000.
$12,000.
$39,000.
$40,000.
Some other amount.
Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 25% are collected in the month of sale; 55% are collected in the first month after sale; and 20% are collected in the second month after sale. If sales for April, May, and June were $64,000, $84,000, and $74,000, respectively, what were the firm's budgeted collections for June?
$18,500.
$56,200.
$64,700.
$77,500.
Some other amount.
Verna's makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for October, November, and December were $65,000, $55,000, and $45,000, respectively, what was the budgeted receivables balance on December 31?
$31,500.
$37,000.
$39,500.
$53,000.
Some other amount.
Explanation / Answer
Answer 1 is $10,000.
Budgeted Sales in April = $50,000
Collection of Sales on account: 20% in month of sales, 50% in first month after sales and 30% in second month after sales.
Collection in April = 20% of April Sales
Collection in April = 20% * $50,000
Collection in April = $10,000
Answer 2 is $77,500.
Budgeted Sales in April = $64,000
Budgeted Sales in May = $84,000
Budgeted Sales in June = $74,000
Collection of Sales on account: 25% in month of sales, 55% in first month after sales and 20% in second month after sales.
Collection in June = 20% of April Sales + 55% * May Sales + 25% of June Sales
Collection in June = 20% * $64,000 + 55% * $84,000 + 25% * $74,000
Collection in June = $77,500
Answer 3 is $37,000.
Budgeted Sales in October = $65,000
Budgeted Sales in November = $55,000
Budgeted Sales in December = $45,000
Collection of Sales on account: 30% in month of sales, 60% in first month after sales and 10% in second month after sales.
Budgeted Receivables balance on December 31 = 10% of November Sales + 70% of December Sales
Budgeted Receivables balance on December 31 = 10% * $55,00 + 70% * $45,000
Budgeted Receivables balance on December 31 = $37,000