CAF-7 · Chapter 11 · Question 14 of 15
A company is preparing its cash budget. Sales are Rs. 1,000,000 per month. 20% of sales are for cash. For the credit sales, 50% are collected in the month following the sale, and 50% are collected two months after the sale. What will be the total cash collected in Month 3 from sales?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 1,000,000
Explanation
In Month 3: Cash sales = 200,000. Month 2 credit sales collected (800,000 x 50%) = 400,000. Month 1 credit sales collected (800,000 x 50%) = 400,000. Total = 200,000 + 400,000 + 400,000 = Rs. 1,000,000.
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