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Royal Cigar Company is preparing a budget for cash collections. Its sales for November and December...

Royal Cigar Company is preparing a budget for cash collections. Its sales for November and December are estimated as $130,000 and $148,000, respectively. Past practice indicates that sales in any given month are collected as follows: month of sale, 65%; month following the month of sale, 30%; uncollectible accounts, 5%. The company allows a 2% discount for cash collections in the month of sale.

What is the net cash estimated to be collected in December?

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Answer #1
Budget for Cash Collection
December
Cash collection from the sale made in november($130,000*30%) $                        39,000
Cash collection from the sale made in December[($148,000*65%)-($148,000*65%*2%)] $                        94,276
Cash collection in the month of December $                      133,276
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