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Tanya Corp. sells its products on both credit and cash basis. Monthly sales are sold 20% for...

Question:

Tanya Corp. sells its products on both credit and cash basis. Monthly sales are sold 20% for cash, 80% for credit.

Credit sales are collected 65% in the month of sale and 35% the following month.

Sales for the first quarter are BUDGETED as follows:

January, $250,000;

February, $360,000;

March, $300,000.

Compute cash collections budgeted for February. How much cash was collected in the month?

Cash Collection:

The amount of money which is given on credit has to be collected. So, the cash collection is the amount of cash collected after a particular period of time.

Answer and Explanation:

Figures in ($)

Particulars January February March
Sales (Given) (A) 250,000 360,000 300,000
Cash Sales (B) (20% of A) 50,000 72,000 60,000
Credit Sales (C) (80% of A) 200,000 288,000 240,000
Cash Collection (D) (65% of C) 130.000 187,200 156,000
Cash to be collected of the previous month (E) (F of Last Month) 0 70,000 100.800
Total Cash Collected (B+D+E) 180,000 329,200 316.800
Cash to be collected in the following month (F) (35% of C) 70,000 100,800 84,000

Hence, from the above table answer to the question are as follows:

Cash Collections budgeted for February = $70,000

Cash collected in February = $329,200


Learn more about this topic:

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Cash Collection & Concentration: Definition & Components

from Finance 101: Principles of Finance

Chapter 18 / Lesson 3
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