Question

Seventy percent of Parlee Corporation's sales are collected in the month of sale, 25% in the month following sale, and 5% in the second month following sale. The following are budgeted sales data for the company:
Jan Feb Mar Apr
Total Sales $600,000 $700,000 $500,000 $300,000
Total Budgeted cash collections in April would be:________.
a. $125,000.
b. $210,000.
c. $370,000.
d. $35,000.

Answer 1

Answer:

C) $370,000

Explanation:

sales expressed in thousands of $

Month          total sales       collected in          collected in         collected  

                                            current m. 70%     next m. 25%       2 m. 5%

Jan.              600                420            

Feb.              700                490                         150

Mar.              500                350                         175                     30

Apr.              300                 210                          125                     35

May                                                                      75                      25

June                                                                                               15

total cash collection in April = $210,000 + $125,000 + $35,000 = $370,000