Solve Cash Collections for January, Feburary, and March If Image is blurry: http

Question

Solve Cash Collections for January, Feburary, and March

If Image is blurry: https://i.imgur.com/m9tMGjL.png

E9-27A (similar to) cueshon Help Smith Corporation has our d that 00 s of its sacs n an gwar onth re crean " cs wh k te emanderare cash " es Ofthe credit sa cs Smith Corporation Novembe sales for st ycar January ales February sales cre $10 000, whic Decem cr sa cs were $1 16 000. Pro ected ?? or he next three month" e as folows 145 000 120.000 00u 50% recewed in the month after the salc- % rec wed two months Requirement Smith Corporation Cash Collections Hudget edio ur 25% Month of ale

Explanation / Answer

note: since 80% are credit sales (100 - 80 =>20%) will be cash sales.

smith corporation

cash collections budget

for the months of january through march

note:

january credit sales = $145,000 * 80% =>$116,000

25% is received in january =>$116,000* 25% =>$29,000.

50% is received in february =>$116,000 *50%=>$58,000.

18% is received in march =>$116,000*18% =>$20,880.

18% of november credit sale is received in january = $105,000 * 80% *18% =>$15,120.

50% of december credit sale is received in january = $115,000*80% *50% =>$46,000.

18% of december credit sale is received in february=$115,000 * 80%*18%=>$20,700.

consider february:

credit sale of february = $120,000 *80% =>$96,000.

25% is received in february =>96,000*25% = 24,000

50% is received in march =>96,000*25% = $48,000.

18% is received in april...(which is not relevant for the question).

credit sale of march = $165,000 *80% =>$132,000.

25% is received march =>$132,000 * 25% =>$33,000.

rest is not relevant for the question.

january february march quarter cash sales (145,000*20%) (120,000*20%) (165,000*20%) 29,000 24,000 33,000 $86,000 collections on credit sales: 25% month of sale (based on jan, feb, mar sale) $29,000 $24,000 $33,000 $86,000 50% month after sale (based on dec, jan, feb, sale) $46,000 $58,000 $48,000 $152,000 18% two months after (based on nov, dec, jan sale) $15,120 $20,700 $20,880 $56,700 total cash collections $119,120 $126,700 $134,880 $380,700

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