A company sells flower bulbs to local nurseries. Each bag of bulbs sells for $2.

Question

A company sells flower bulbs to local nurseries. Each bag of bulbs sells for $2. The company's accountant has prepared the following sales forecast (in bags) for the fourth quarter of 2016:

5,000 bags

9,000 bags

8,000 bags

Historically, the cash collection of sales has been as follows: 40 percent in the month of sale and 60 percent in the month following sale.

Cash receipts for December are expected to be:

A. $16,800

B. $ 6,400

C. $16,200

D. $ 17,200

October

5,000 bags

November

9,000 bags

December

8,000 bags

Explanation / Answer

Cash receipts for December are expected to be D $17200

Particulars October November December Sales (units) 5000 9000 8000 Selling Price 2 2 2 Sales 10000 18000 16000 Cash receipts October Sales 4000 6000 November sales 7200 10800 December Sales 6400 Cash receipts 4000 13200 17200

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