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    Cash collections

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    The PDQ Company makes collections on credit sales according to the following schedule:

    25% in month of sale
    70% in month following sale
    4% in second month following sale
    1% uncollectible

    The following sales have been budgeted:
    Month Sales
    April $100,000
    May $120,000
    June $110,000

    Cash collections in June would be:

    a. $113,400

    b. $110,000

    c. $111,000

    d. $115,500

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    Solution Summary

    The solution explains how to calculate the cash collections.