Sioux Corporation is estimating the following sales for the first four months of next year: Sales are normally collected 60% in the month of sale and 40% in the month following the sale.Based on this information, how much cash should Sioux expect to collect during the month of April?

A) $370,000
B) $222,000
C) $119,000
D) $358,000

Question

Sioux Corporation is estimating the following sales for the first four months of next year:

Sales are normally collected 60% in the month of sale and 40% in the month following the sale.Based on this information, how much cash should Sioux expect to collect during the month of April?

A) $370,000
B) $222,000
C) $119,000
D) $358,000

Sharanjeet Lally · Accepted Answer

Final Answer : D, Explanation :  To determine the amount of cash Sioux expects to collect in April, we need to calculate the sales and collections for each month:January sales: $500,000 x 60% = $300,000 collected in JanuaryFebruary sales: $600,000 x 60% = $360,000 collected in February$600,000 x 40% = $240,000 collected in MarchMarch sales: $700,000 x 60% = $420,000 collected in March$700,000 x 40% = $280,000 collected in AprilApril sales: $800,000 x 60% = $480,000 collected in AprilTherefore, the total cash collected in April will be $280,000 (from March sales) + $480,000 (from April sales) = $760,000.However, the question is asking specifically for the amount of cash collected during the month of April, so we only need to consider the collections that occur in that month. From the above calculations, we can see that $280,000 is collected in April from March sales, and $480,000 is collected in April from April sales. Therefore, the total cash collected in April is:$280,000 + $480,000 = $760,000The closest answer choice to this amount is D) $358,000, which is not correct. The correct answer is therefore:Answer: DThe amount of cash Sioux should expect to collect during the month of April is $760,000.

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