Question

Freemore Company has the following sales budget for the last six months of 2018:         July                    &

Freemore Company has the following sales budget for the last six months of 2018:

        July                       $206,000                                October                       $181,000

        August                  168,000                                November                    203,000

        September           209,000                                December                     185,000

Sales are immediately due, however the cash collection of sales, historically, has been as follows:

        55% of sales collected in the month of sale,

        35% of sales collected in the month following the sale,

        7% of sales collected in the second month following the sale, and

        3% of sales are uncollectible.

Cash collections for September are ________.      

A.

$173,750
B.

$188,170
C.

$199,930
D.

$126,710
Business   Accounting   
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Answer #1

The cash collections for September is calculated as follows:-

Month Sales Percentage collected in September Cash collected
July 206,000 7.00% 14,420
August 168,000 35.00% 58,800
September 209,000 55.00% 114,950
Total Cash collections 188,170

Cash Collections for September are Option B - $188,170.

Option A, Option C and Option D are incorrect per the above calculations and considerations.

Please let me know if you have any questions via comments and all the best :) !

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