CA Inter P4 · Chapter 14 · Question 4 of 7
Sales are budgeted at ₹4,00,000 for August, ₹5,00,000 for September and ₹6,00,000 for October. 20% of sales are for cash; 50% of sales are collected in the month following the sale and the remaining 30% in the second month following the sale. Cash collections from customers in October are:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹4,90,000
Explanation
October collections = cash sales of October 20% x ₹6,00,000 = ₹1,20,000 + 50% of September sales ₹2,50,000 + 30% of August sales ₹1,20,000 = ₹4,90,000.
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