Question

Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the month following sale, and 6% in the second month following sale. The remainder is uncollectible. Budgeted sales for the next four months are: Cash collections in April are budgeted to be: Select one: a. $321,000 b. $313,000 c. $320,000 d. $292,000

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Cash collection= 20% of a month's sales in the month of sale

Account sales= 70% in the month following sale, and 6% in the second month following sale.

The remainder is uncollectible.

We weren't provided with information regarding sales. I can invent some numbers to show how it's done.

Sales:

February= 200,000

March= 188,000

April= 213,000

Cash collection:

Sales in cash April= (213,000*0.2)= 42,600

Sales on Account March= (188,000*0.7)= 131,600

Sales on Account February= (200,000*0.06)= 12,000

Total cash April= $186,200