Grace Manufacturing Company needs to know its anticipated cash inflows for the n

Question

Grace Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 30 percent in the month after the sale, and the remaining 20 percent two months after the sale. Gross sales for the quarter are projected as follows: January, $40,000. February, $20,000. and March, $60,000. Accounts receivable on December 31 were $30,000. Graces's expected cash collections for March would be how much?

Explanation / Answer

data of sales for the month of march

7500*0.20=1500

total cash rec. in month of march $8900

data of sales for the month of march

cash sale of the month march 20 % of 60000 * 0.50 = $6000 cash rec. for sale on february 20% of 20000*0.30=$1200 cash rec. of sale in december

7500*0.20=1500

total cash rec. in month of march $8900

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