A company's history indicates that 30% of its sales are for cash and the rest are on credit. Collections on credit sales are 25% in the month of the sale, 55% in the next month, and 15% the following month. Projected sales for January, February, and March are $74,000, $99,000 and $109,000, respectively. The March expected cash receipts from current and prior credit sales is:

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anthougo anthougo · Answer 1 · 2022-08-12T18:25:58+02:00

The company's March expected cash receipts from current and prior credit sales are $97,660.

The cash receipts represent the receipts from cash sales and the cash collections from credit sales.

Each period's cash receipts depend on the company's cash collection history based on estimated collections from credit customers.

Cash sales percent = 30% of sales

Credit sales percent = 70% of sales (100% - 30%)

Collections on credit:

The month of sales = 25%

The second month = 55%

The third month = 15%

January February March

Project Sales: $74,000 $99,000 $109,000

Credit Sales: $51,800 $69,300 $76,300

Cash receipts:

Cash sales (30%) $22,200 $29,700 $32,700

Collections on credit:

1st month (25%) 12,950 17,325 19,075

2nd month (55%) 28,490 38,115

3rd month (15%) 7,770

Total cash receipts in March $97,660

Thus, the company's March expected cash receipts from current and prior credit sales are $97,660.

Learn more about the credit collection history at https://brainly.com/question/20714255

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