intead of January Sales totaled $200,000, and February sales totaled $500,000 it
ID: 2595605 • Letter: I
Question
intead of
January Sales totaled $200,000, and February sales totaled $500,000 its
February Sales totaled $200,000, and March sales totaled $500,000
it was a mistake on the question..
Platinum, Inc. makes a product that is very popular at Easter time. Thus peak sales occur in April each year, as shown in the company's sales budget for the fourth quarter given below: May April $875,000 June Total Budgeted sales (all on account) $425,000 $300,000 $1,600,000 From past experience the company has learned that 40% of a month's sales are collected in the month month following sale. Bad debts are negligible and can be ignored. January Sales totaled $200,000, and of sale, another 40% in the month following sale, and the remaining 20% are collected in the second February sales totaled $500,000. 9) What are the cash collections for the quarter? 10) What is the Accounts Receivable Balance at the end of June?Explanation / Answer
9)
Collections for April
20% of February Sales + 40% of March Sales + 40% of April Sales
= 20% of $200,000 + 40% of $500,000 + 40% of $875,000
= $ 590,000
Collections for May
= 20% of March Sales + 40% of April Sales + 40% of May Sales
= 20% of $500,000 + 40% of $875,000 + 40% of $425,000
= $ 620,000
Collections for June
= 20% of April Sales + 40% of May Sales + 40% of June Sales
= 20% of $875,000 + 40% of $425,000 + 40% of $300,000
= $ 465,000
So, cash collections for the quarter
= $ 590,000 + $ 620,000 + $ 465,000
= $1,675,000
10)
Accounts receivable at the end of June will be
20% of May sales + 60% of June sales
= 20% of $425,000 + 60% of $300,000
= $265,000
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