Question
1. A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20%
1. A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 45% in the next month, and 20% the following month. Projected sales for January, February, and March are $72,000, $97,000 and $107,000, respectively. The March expected cash receipts from all current and prior credit sales is:
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$79,610
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$63,560
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$79,450
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$91,800
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$47,510
2. Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 30% of the next month's sales. It estimates that May's ending inventory will consist of 85,500 units. June and July sales are estimated to be 285,000 and 295,000 units, respectively. Compute the number of units to be produced that would appear on the company's production budget for the month of June.
3.
The Gardner Company expects sales for October of $243,000. Experience suggests that 40% of sales are for cash and 60% are on credit. The company collects 50% of its credit sales in the month of sale and 50% in the month following sale. Budgeted Accounts Receivable on September 30 is $65,500. What is the amount of cash expected to be collected in October?
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