# Ratchet Manufacturing anticipates total sales for August, September, and October of $200,000,... ## Question: Ratchet Manufacturing anticipates total sales for August, September, and October of$200,000, $210,000, and$220, 500 respectively. Cash sales are normally 25% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of cash received for September.

a. $150,000. b.$202,500.

c. $157,500. d.$102,500.

e. $307,500. ## Cash Collections: Companies often extend credit to customers and allow them to pay for purchased merchandise at a later date. An accounts receivable is thus established for these customers. A cash budget must be maintained to keep up with expected cash receipts for the month. ## Answer and Explanation: Answer: b.$202,500.

Explanation:

Given information:

• September sales = $210,000 • Cash sales = 25% of total sales • Credit sales collected in the first month after the sale September cash sales can be calculated as:$210,000 * .25 = $52,500 Collections from August credit sales can be calculated as:$200,000 - ($200,000 * .25) =$150,000

Amount of cash received for September can be calculated as:

$52,500 +$150,000 = \$202,500