# All of Porter Corporation's sales are on account. Fifty percent of the credit sales are collected...

## Question:

All of Porter Corporation's sales are on account. Fifty percent of the credit sales are collected in the month of sale, 35% in the month following sale, and 10% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data for the company:

Total sales

January $404,000 February$614,000

March $694,000 April$814,000

Cash receipts in April are expected to be:

a. $407,000. b.$649,900.

c. $711,300 d.$304,300

## Cash collection schedule:

The cash collection schedule is prepared with the help of anticipated (pre-estimated) cash collection trend. The cash to be received during the current period includes the account receivables for the earlier period.

The correct answer is option (c).

Cash receipts in April are expected to be $711,300. Explanation: Cash receipts in April are expected to be$711,300 ($614,000 x 10% +$694,000 x 35% + \$814,000 x 50%).