ABC Enterprises has budgeted sales for the next four months as follows: Budgeted

Question

ABC Enterprises has budgeted sales for the next four months as follows: Budgeted Sales in Units January 7,400 units February 3,900 units March 5,300 units April 4,600 units ABC's product sells for $20 each. Experiences has shown that 10% of the company's sales are cash sales and 90% of the com,pany's sales are made on account. The sales on account are collected in the pattern 30% in the month of s,ale, 55% in the month following sale, and 15% is collected in the second month following sale. Calculate the total expected cash collections for the month of March.

Explanation / Answer

                                 Jan           Feb          Mar            Apr

Sales unit                    7400         3900        5300           4600

Sales revenue             148000       78000      106000        92000

Cash sales (10%)          14800         7800        10600          9200
Credit Sales (90%)        133200       70200       95400          82800

Total cash collection on March:

Cash sales in march: $10600

Credit sales in march: 30% x 95400 =$28620

Credit sales in Feb: 55% x 70200 = $39600

Credit sales in Jan: 15% x 133200 = $19980

Total cash collection = 10600 + 28620 + 39600 + 19980 = $98800

Hope this helps!

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