Question

Ruiz Co.’s budget includes the following credit sales for the current year: September, $152,000; October, $143,000;...

Ruiz Co.’s budget includes the following credit sales for the current year: September, $152,000; October, $143,000; November, $127,000; December, $164,000. Credit sales are collected as follows: 10% in the month of sale, 60% in the first month after sale, and 30% in the second month after sale. How much cash can the company expect to collect in December as a result of current and past credit sales?

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Answer #1

Answer - $135,500

explanation:

given,

September = $152,000; October = $143,000; November = $127,000; December = $164,000

Conditions -

1. 10% in the month of sale - December sale = $164,000 * 10% = $16,400

2. 60% in the first month after sale,

therefore, December will be first month of the sale of the month of November's collection

= $127,000 * 60%

= $76,200

3. 30% in the second month after sale,

therefore, December will be second month of the sale of the month of October's collection

= $143,000 * 30%

= $42,900

Therefore, December's collection = ($16,400 + $76,200 + $42,900)

= $135,500

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