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Expected cash collection pattern is 50% in the month of sale, 30% in the following and 15% in the second following month. Five percent of the credit sales December collections will be: month, are uncollectible Sales Budget Month October November December January Credit Sales $80,000 $100,000 $120,000 $70,000 a. $70,000 b. $102,000 c. $108,000 d. $100,000 Expected cash collection pattern is 50% in the month of sale, 30% in the following month. and 15% in the second following month. Five percent of the credit sales are uncollectible. November collections were $92,000. September sales were: Sales Budget Month October November December January Credit Sales $80,000 $100,000 $120,000 $70,000 a. $90,000 b. $120,000 c. $100,000 d. $100,000

Respuesta :

Cash collections for December should be $103,500

Explanation:              

As a percentage of any sales is usually made on account which is 75%. The cash collection shall be received in categories as follows:                      

Cash collection on account          

$Month of sale 50% × 75�cember Sales

= 50% × (100-25)% × 120,000  =       45,000

One month after  sales

30% × 75% ×  November  sales

30% × 75% × 180,000 =                  40,500

2 months after sales

15% × 75% × October sales

15% × 75% × 160,000 =                    18,000

                                                    103,500

Cash collections for December should be $103,500.

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