Question

95.

Wichita Industries' sales are 10% for cash and 90% on credit. Credit sales are collected as follows: 30% in the month of sale, 60% in the next month, and 10% in the following month. On December 31, the accounts receivable balance includes $32,000 from November sales and $42,000 from December sales. Assume that total sales for January and February are budgeted to be $70,000 and $140,000, respectively. What are the expected cash receipts for February from current and past sales?

Multiple Choice

A.$43,800.

B.$51,800.

C.$61,000.

D.$75,800.

E.$95.600.

PLEASE GIVE THE CORRECT LETTER ANSWER WITH EXPLANATION!

Answer 1

E.$95.600

Schedule of Cash collection from sales
			January	February
Total Sales			$       70,000	$       1,40,000
Cash Sales			$         7,000	$           14,000
Credit Sales			$       63,000	$       1,26,000
Collection o credit Sales of:
November			$       32,000
December			$       36,000	$             6,000
January			$       18,900	$           37,800
February				$           37,800
Total collcetion fro cedit Sales			$       86,900	$           81,600
Total Collection from sales			$       93,900	$           95,600
Working:
a.	Accounts Receivable balance of December Sales					a	$ 42,000
	Total percentage of Receivable			(60%+10%)		b	70%
	Total credit sales of December					a/b	$ 60,000
	Collection of December credit sales in:
	December		$       60,000	x	30%	=	$ 18,000
	January		$       60,000	x	60%	=	$ 36,000
	February		$       60,000	x	10%	=	$    6,000