CIMA BA2 · Chapter 6 · Question 6 of 13
A company's credit sales are expected to be: January $60,000, February $75,000, March $80,000. Customers pay as follows: 20% in the month of sale, receiving a 2% discount; 50% in the month after sale; 28% in the second month after sale; and 2% are irrecoverable. What are the budgeted cash receipts in March?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) $69,980
Explanation
March receipts: from March sales 20% x $80,000 x 98% = $15,680; from February sales 50% x $75,000 = $37,500; from January sales 28% x $60,000 = $16,800. Total = $69,980. Irrecoverable debts are never received, and the discount reduces the cash collected from March sales.
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