Sales projections are in the table below 30 of sales are col

Sales projections are in the table below, 30% of sales are collected in the month of sale: 60% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. What is the amount of cash collections in December? A. $38,500 B. $42,000 C. $45,000 D. $55,000 October November December January February 40,000 $60,000 50,000 $35,000 $ 25.000

Solution

Cash collection in December = 30% of December sales + 60% of November sale + 10% of October sale

= 30% * 50000 + 60% * 60000 + 10% * 40000

= 15000 +36000 +4000

= 55000