Your hospital has the following revenue for the months July-September: July $3,000,000, August...

Question:

Your hospital has the following revenue for the months July-September: July $3,000,000, August $4,000,000, September $3,000,000. If 30% of the moths revenue is collected in the same month, 40% is collected in the second month and 30% is collected in the third month, (a) how much of July's revenue is collected in August? (b) How much of Augusts' revenue is collected in September?

Cash collection:

Cash collection refers to the collection of cash from the sales made on account or the credit sales. Cash collection for a particular period is given as the cash sales plus the cash collected in the current period from the current period sales and from all the previous periods sales.

Answer and Explanation:

Question a)

In the second month, 40% of revenue is collected

So,

July's revenue collected in August
= 40% of July's Revenue
= 40% x 3,000,000
= $1,200,000.00

Question b)

Similarly,

August's revenue collected in September
= 40% of August's Revenue
= 40% x 4,000,000
= $1,600,000.00


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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