95. Wichita Industries\' sales are 10% for cash and 90% on credit. Credit sales

Question

95.

Wichita Industries' sales are 10% for cash and 90% on credit. Credit sales are collected as follows: 30% in the month of sale, 60% in the next month, and 10% in the following month. On December 31, the accounts receivable balance includes $32,000 from November sales and $42,000 from December sales. Assume that total sales for January and February are budgeted to be $70,000 and $140,000, respectively. What are the expected cash receipts for February from current and past sales?

Multiple Choice

A.$43,800.

B.$51,800.

C.$61,000.

D.$75,800.

E.$95.600.

PLEASE GIVE THE CORRECT LETTER ANSWER WITH EXPLANATION!

Explanation / Answer

E.$95.600

Schedule of Cash collection from sales January February Total Sales $       70,000 $       1,40,000 Cash Sales $         7,000 $           14,000 Credit Sales $       63,000 $       1,26,000 Collection o credit Sales of: November $       32,000 December   $       36,000 $             6,000 January $       18,900 $           37,800 February $           37,800 Total collcetion fro cedit Sales $       86,900 $           81,600 Total Collection from sales $       93,900 $           95,600 Working: a. Accounts Receivable balance of December Sales a $ 42,000 Total percentage of Receivable   (60%+10%) b 70% Total credit sales of December a/b $ 60,000 Collection of December credit sales in: December $       60,000 x 30% = $ 18,000 January $       60,000 x 60% = $ 36,000 February $       60,000 x 10% = $    6,000

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