The following credit sales are budgeted by Roswell Company: $30,000 in January,$50,000 in February and $70,000...

The following credit sales are budgeted by Roswell Company: $30,000 in January,$50,000 in February and $70,000 in March. The company's past experience indicates that 70% of the credit sales are collected in the month of sale and 30% in the month following the sale. The anticipated cash inflow for the month of March is

Select one:

a. $58,800

b. $44,000

c. $70,000

d. $64,000

Expert Solution

Option (D) $64,000 is correct.


Months	Januray	February	March
Credit Sales	$ 30,000	$ 50,000	$ 70,000
70% in same month	$ 21,000	$ 35,000	$ 49,000
30% in following month	$ -	$ 9,000	$ 15,000
Anticipated cash inflow	$ 21,000	$ 44,000	$ 64,000

Working Notes:
Months	Januray	February	March
*70% collection in same month	($30000*70%)=$21000	($50000*70%)=$35000	($7000070%)=$49000*
*30% collection in following month	0	($30000*30%)=$9000	($5000030%)=$15000*

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ekkarill92 answered 1 year ago

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