Answer:
$198,225
Explanation:
The amount of cash expected is a function of sales in 2 months.
Given that the company collects 50% of its credit sales in the month of sale and 50% in the month following sale, cash collection for October will include 45% sales in October, 50% of 55% sales in October and 50% of 55% sales in September. The 50% of 55% sales in September represents the accounts receivable balance for the month.
Hence October cash collection expected
= (45% × $248,000) + (50% × 55% × $248,000) + (50% × 55% × $67,000)
This is on the assumption that the balance in accounts receivable as at 30 September has been adjusted for the 50% of credit sales collectible in the month of sale
October cash collection expected
= $198,225
Answer:
Total Cash Collections for October $ 246,800
Explanation:
The Gardner Company
Expected sales for October $248,000
Cash sales for October $248,000* 45%= $ 111600
Credit sales for October $248,000*55%= $ 136,400
Expected Accounts Receivable for credit Sales Of October = $ 136,400*50 %
= $ 68,200
Budgeted Accounts Receivable on September 30 is $67,000
So the same will be for October i.e $ 67,000
The total cash collected in October would be =Cash Sales in October + Cash for Credit Sales in October + Cash for credit sales in September
Total Cash Collections for October= $ 111600+$ 68,200+$67,000=$ 246,800
