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    Cash Collections Computation

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    The sales budget of a company for the fourth quarter of 2009 is as follows:

    October November December
    Sales $96,000 $72,000 $108,000

    Sales are 20% cash, 80% credit.

    Cost of goods sold is 70% of total sales.

    Desired ending inventory for each month is equal to 25% of cost of goods sold for the following month.

    Collections on credit sales are as follows:
    50% in the month of sale
    30% in the month following sale
    15% in the second month following sale
    5% uncollectable

    October 1 inventory is $16,000

    Expected sales for January 2007, are $84,000

    Payments foe inventory are 70% in the month following purchase and 30% two months following purchase.

    Compute the CASH COLLECTIONS for DECEMBER

    © BrainMass Inc. brainmass.com June 3, 2020, 11:53 pm ad1c9bdddf
    https://brainmass.com/business/accounting/cash-collections-computation-306234

    Solution Summary

    Cash collections computations are given for December.

    $2.19

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