Question

Best Buy sales for any given month are 20% cash and 80% credit. Of the credit sales, half are collected the month after the sale and half are collected two months after the sale. When doing a February cash collections budget, which months need to be considered in your calculations?

Answer 1

To determine the cash collection for February, you have to consider the sales on account form previous months.

Step-by-step explanation:

To determine the cash collection for February, you have to consider the sales on account form previous months.

Cash Collection February:

Sales in cash= ($X*0.2)=

Sales on account:

From January= ($X*0.8)*0.5=

From December= ($X*0.8)*0.5=

Total cash=