14. Tolla Company is estimating the following sales for the first six months of

Question

14. Tolla Company is estimating the following sales for the first six months of next year: January $350,000 February $300,000 March $320,000 April $410,000 May $450,000 June $470,000 Sales at Tolla are normally collected as 70 percent in the month of sale, 25 percent in the month following the sale, and the remaining 5 percent being uncollectible. Also, customers paying in the month of sale are given a 2 percent discount. Based on this information, how much cash should Tolla expect to collect during the month of April?

Explanation / Answer

320,000 x 25% = $80,000 collected from March sales
(410,000 x 70%) x 98% = $281,260 collected from April sales
80,000 + 281,260 = $361,260 cash collected in April.

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