Question

Benton Company's sales budget shows the following expected total sales: Month Sales January $ 25,000 February $ 30,000 March $ 35,000 April $ 40,000 The company expects 80% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off.

The total cash receipts during April would be:

Answer 1

Total Cash inflows from sales = $36640

Step-by-step explanation:

given data

Month Sales

January $25,000

February $30,000

March $35,000

April $40,000

to find out

The total cash receipts during April

solution

first we get here Cash sales of April month that is express as

Cash sales of April month = $40,000 × 30%

Cash sales of April month = $40,000 × 0.30

Cash sales of April month = $12000

and

now we get collection from credit sale of April that is

collection from credit sale = ( $40000× 70% ) × 25%

collection from credit sale = ( $40000× 0.70 ) × 0.25

collection from credit sale = $7000

and

Collection from Credit sales of March that is

Collection from Credit sales = ( $35000× 70% ) × 72%

Collection from Credit sales = ( $35000× 0.70 ) × 0.72

Collection from Credit sales = $17640

so

Total Cash inflows from sales will be

Total Cash inflows from sales = $12000 + $7000 + $17640

Total Cash inflows from sales = $36640