Question

Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $235,000, $320,000, and $426,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.

The cash collections in November are

a.$106,500

b.$223,650

c.$482,580

d.$402,150

Answer 1

The correct answer is : d.$402,150

Notes:

	September	October	November
Total Sales	2,35,000	3,20,000	4,26,000
Cash Sales(25 % * Total Sales)	58,750	80,000	1,06,500
Credit Sales   (Total Sales - Cash Sales)	1,76,250	2,40,000	3,19,500
	September	October	November
Credit Sales	1,76,250	2,40,000	3,19,500
Cash Collections :
70% in month of sale	1,23,375	1,68,000	2,23,650
30% in first month after sale	-	52,875	72,000
Cash Sales Receipts	58,750	80,000	1,06,500
Cash Collections	1,82,125	3,00,875	4,02,150