Matterhorn, Inc. had the following sales for the past six months. Matterhorn collects its credit sales 30% in the month of sale, 60% one month after the sale, and 10% two months after the sale.
|Cash Sales||Credit Sales|
What are Matterhorn's total cash receipts for the month of March?
Cash collection refers to the receipt of cash from the sales made by the company. It is given as the cash sales plus the collection from sales made in the current period plus the collection from sales made in any of the previous periods.
Answer and Explanation:
Cash receipts for March
= Cash sales of March + 30% of credit sales of March + 60% of credit sales of February + 10% of Credit sales of January
= 55,000 + 95,000 x 30% + 110,000 x 60% + 50,000 x 10%
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Learn more about this topic:
from Finance 101: Principles of FinanceChapter 18 / Lesson 3