Question

17. Flanders Industries collects 35% of its sales on account in the month of the sale and 65% in the month following the sale. If sales on account are budgeted to be $175,000 for May and $225,000 for June, what are the budgeted cash receipts from sales on account for June?

Answer 1

Answer:

The correct answer is $192,500.

Explanation:

According to the scenario, the given data are as follows:

Cash collected for current month of May = $175,000 × 35% = $61,250

Cash collected For current month of June = $225,000 × 35% = $78,750

For the next month of May ( June) = $175,000 × 65% = $113,750

For the next month of June (July) = $225,000 × 65% = $146,250

So, we can calculate the receipt from sales by using following formula:

Total sales = Cash collected For current month of June + For the next month of May ( June)

= $78,750 + $113,750

= $192,500

Hence, the budgeted cash receipts from sales on account for June is $192,500.