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Question
In: Accounting
Copper Corporation has the following sales budget for the last six months of 2016:
Copper Corporation has the following sales budget for the last six months of 2016:
| July | $200,000 | October | $180,000 |
| August | 160,000 | November | 200,000 |
| September | 220,000 | December | 188,000 |
Historically, the cash collection of sales has been as follows:
65 percent of sales collected in month of sale,
25 percent of sales collected in month following sale,
8 percent of sales collected in second month following sale, and
2 percent of sales is uncollectable.
Cash collections for October are
$117,000.
$174,000.
$184,800.
$199,000.
$176,400.
Solutions
Expert Solution
To calculate the cash collections of October we need to understand what sales collection will be received in October
As per the information given in the question
- 65 percent of sales collected in month of sale - This means (65% of $180,000) will be collected during the month of October. 65% of $180,000 = $117,000.
- 25 percent of sales collected in month following sale - This means 25% of the sales made in September will also be collected during October. 25% of $220,000 = $55,000.
- 8 percent of sales collected in second month following sale - This means 8% of the sales made in August will also be collected during October. 8% of $160,000 = $12,800.
Therefore cash collections of October is
= $117,000 + $55,000+ $12,800
= $184,800
$184,800
Junaid answered 1 year agoRelated Solutions
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