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Cash Collections

The Company A has provided the following information:

Forecasted sales for 1st quarter $200,000
Forecasted sales for 2nd quarter 250,000
Cash sales = 10% of total sales

Collection schedule:
In quarter sold 75%
In next quarter 25%

What are forecasted cash collections for the second quarter for Company A?

Solution Preview

For the second quarter
=25%*90%*200000+250000*10%+250000*90%*75%
=$238750

Thus the correct answer is $238750

Note:
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Solution Summary

This explains the method to calculate the cash collections with the help of an example

$2.19