Question

The Twisty Tie Dye Co. was formed and began operations in September 2017. The company sells one product; a fabulous, ultra soft plush poncho handmade from French cotton terry. All of the Twisty Tie Dye Co. sales are on account. Sixty percent of the credit sales are collected in the month of sale, 25% in the month following sale, and 10% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data for the company for the first 4 months of operations:

	September	October	November	December
Total Sales	$400,000	$600,000	$500,000	$700,000

Cash receipts for the month of October and December are?

Answer 1

	September	October	November	December
Total Sales	400,000	600,000	500,000	700,000
Cash Collection:
Collecetd in the month of sale	240,000	360,000	300,000	420,000
Collecetd in the next month of sale		100,000	150,000	125,000
Collecetd in the second month of sale			40,000	60,000
Total cash collection	240,000	460,000	490,000	605,000