US CMA Part 1 · Chapter 2 · Question 15 of 30
Credit sales are budgeted at $200,000 in January, $240,000 in February and $260,000 in March. Collections follow this pattern: 30% in the month of sale, 60% in the following month and 8% in the second month after sale; 2% is uncollectible. What are the budgeted cash collections in March?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $238,000
Explanation
March collections = 30% of March sales + 60% of February sales + 8% of January sales = $78,000 + $144,000 + $16,000 = $238,000. The 2% bad debts are never collected and must be excluded.
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