Asked by
Adriana Ramirez
on Dec 17, 2024
Verified
A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible. Projected sales for December, January, and February are $60,000, $85,000, and $95,000, respectively. The February expected cash receipts from all current and prior credit sales are
A) $61,200
B) $57,000
C) $66,400
D) $90,250
Cash Receipts
The collection of cash, typically by a business from its customers, for goods or services provided.
Credit Sales
Credit sales are transactions where the customer purchases goods or services with an agreement to pay at a later date.
Cash Budget
A cash budget is a financial plan that estimates cash inflows and outflows over a specific period of time.
- Understand the components and importance of a cash budget.
Verified Answer
DD
Learning Objectives
- Understand the components and importance of a cash budget.