Question

Shown below are the budgeted sales for ABC Company for the next
six months:

                   Sales for Cash     Sales on Account
January               $18,000             $ 95,000 
February              $15,000             $130,000 
March                 $24,000             $ 70,000 
April                 $26,000             $120,000 
May                   $19,000             $ 90,000 
June                  $14,000             $100,000

On average, 45% of the sales on account are collected in the month
of sale, 30% are collected in the month following sale, 15% are
collected in the second month following sale, and the remaining
10% is collected three months after the month of sale.

Calculate the expected cash collections for April.

Answer 1

• All working forms part of the answer
• Total Cash collection in the month of April = $ 130,000
• The same is calculated below:

April
	Total Sales (Cash or On Account)	% collected in April	Amount of cash collected
	[A]	[B]	[C = A x B]
April Cash Sale	$                             26,000.00	100%	$                     26,000.00
Cash collected from the credit sales of:
January Sale	$                             95,000.00	10%	$                       9,500.00
February Sale	$                           130,000.00	15%	$                     19,500.00
March Sale	$                             70,000.00	30%	$                     21,000.00
April Sale	$                           120,000.00	45%	$                     54,000.00
Total Cash collected in April			$                   130,000.00