Question

Crane Company estimates its sales at 80000 units in the first quarter and that sales will increase by 8000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at

Answer 1

Total cash collection Third Quarter= $2,364,000

Step-by-step explanation:

Giving the following information:

40% of the sales are for cash.

70% of the credit customers pay within the quarter.

The remainder is received in the quarter following the sale.

Sales:

Q2= 88,000*25= 2,200,000

Q3= 96,000*25= 2,400,000

Selling price per unit= $25

Cash collection Third Quarter:

Sales in cash= 2,400,000*0.4= 960,000

Sales on account third quarter= (2,400,000*0.6)*0.7= 1,008,000

Sales on account second quarter= (2,200,000*0.6)*0.3= 396,000

Total cash collection Third Quarter= $2,364,000