Question

Noterman Company has credit sales of $600,000 in January. Past experience suggests that 40% is collected in the month of sale, 50% in the month following the sale, and 10% in the second month following the sale. Compute the cash collections from January sales in January, February, and March.

Answer 1

The cash collections from Noterman Company's January sales are $240,000 in January, $300,000 in February, and $60,000 in March.

Step-by-step explanation:

To compute the cash collections from January sales for Noterman Company, we can apply the percentages given for collection in each subsequent month to the total credit sales. The credit sales for January are $600,000. According to the data provided, 40% is collected in January, 50% in February, and 10% in March.

For January:
$600,000 x 40% = $240,000

For February:
$600,000 x 50% = $300,000

For March:
$600,000 x 10% = $60,000

Answer 2

Cash collected in January = $240000

Cash collected in February = $30000

Cash collected in march = $10000

Step-by-step explanation:

We have given that Noteman company has credit sales of January = $60000

It is given that 40% is collected in the month of sale

So cash collected in January
`=(600000* 40)/(100)=$240000`

Cash collected in February
`=(600000* 50)/(100)=$30000`

Cash collected in march =
`=(600000* 10)/(100)=$10000`