Question
A distributor has the following historical collection pattern for its credit sales. 70 percent collected in the month of sale. 15 percent collected in the
A distributor has the following historical collection pattern for its credit sales.
70 percent collected in the month of sale. |
15 percent collected in the first month after sale. |
10 percent collected in the second month after sale. |
4 percent collected in the third month after sale. |
1 percent uncollectible. |
The sales on account have been budgeted for the last seven months as follows:
April | $ 49,000 |
May | 60,000 |
June | 70,000 |
July | 80,000 |
August | 90,000 |
September | 100,000 |
October | 85,000 |
Required: A. Compute the estimated total cash collections during August from credit sales. B. Compute the estimated total cash collections during the August - October quarter from sales made on account during this quarter.
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