Question

Raber Corp finds that 60% of sales are on credit ( accounts receivable). 25% are collected...

  1. Raber Corp finds that 60% of sales are on credit ( accounts receivable). 25% are collected in the month of sale, 50% are collected the month after sale, 18% are collected two months after the sale, 7% are never collected. Sales are: November $85,000, December $120,000, January $170,000, February $125,000. What is the cash received in January?

    a.

    $ 132,800  
    b.

    $147,200   
    c.

    $138,680   
    d.

    $ 170,000   
Business   Accounting   
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Answer #1

Raber corp sales in the month of january = $170000 , which has 60% of sales on credit and 40% on cash basis,

Thus cash receipt for January = 40% of 170000 = $68000

Now, Receipts from the credit sales in January month:

1. For January - 25% of current month credit sales i.e $170000*60%* 25% = $ 25500

2. of  December - 50 % of credit sales of december i.e $120000 * 60% * 50% = $36000

3. of  November   - 18% of credit sales of november i.e $ 85000 * 60% * 18% = $ 9180.

Thus the total cash receipt in January = $ 68000 + 25500 + 36000 + 9180

Total cash receipt in january = $ 138680.

Hence the correct option is ------C i.e $138680.

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