Question

1. All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale. The following are budgeted 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?

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Answer 1

Cash Collected in March = $51,000

Explanation;  

Budgeted Sales ;

January = $50,000 February = $60,000 March = $40,000 April = $30,000

45% in the month of following sale. 35 % of the sales on account are collected in the month of sale.Balance 20% are collected in second month following sales .

Amount of Cash that should be collected in March = (20% of January sales) + (45% of February Sales ) + (35% of March )

= ($50,000 × 20%)+($60,000 ×45%) + ($40,000×35%) = $51,000

=$10,000 + $27,000 + $14,000 = $51,000