· Assume20% of all sales are cash sales; remaining 80% are sales onaccount · 10%

Question

·         Assume20% of all sales are cash sales; remaining 80% are sales onaccount

·         10% ofsales on account are collected in the month of sale; 60% in themonth following; 30% in the 2nd month following

·        Projections   Sales              

·        November       100,000

December       120,000

January          150,000

February        170,000

March             200,000

Calculate the estimated cash from all sources forMarch

March Cash Receipts from allsources$___________________________

Explanation / Answer

Cash Sales in March: 200,000 * .10 = 20,000 Sales on Account in January: 150,000 * .9 = 135,000 Sales on Account in February: 170,000 * .9 = 153,000 Sales on Account in March: 200,000 * .9 = 180,000 Total Cash = Cash Sales + 10% March Accounts Sales + 30% FebruaryAccount Sales + 60% January Account Sales = 20,000 + .1 * 180,000 + .3 * 153,000 + .6 * 135,000 = 164,900

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