Mikhail Corporation has the following sales forecasts for the first three months of 2018: $$\begin{array} { l r }
\text { Month } & \text { Sales } \
\text { January } & \$ 36,000 \
\text { February } & 24,000 \
\text { March } & 40,000
\end{array}$$ Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. $\begin{array}{lr}
\text { Accounts receivable balance (January 1, 2018) } & \$ 16,000 \
\text { Cash balance (January 1,2018) } & 12,000
\end{array}$ Minimum cash balance is $20,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). How much cash would be collected in March from sales?
A)$32,000
B)$58,400
C)$48,000
D)$34,400

Question

Mikhail Corporation has the following sales forecasts for the first three months of 2018: $$\begin{array} { l r } 
\text { Month } & \text { Sales } \
\text { January } & \$ 36,000 \
\text { February } & 24,000 \
\text { March } & 40,000
\end{array}$$ Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. $\begin{array}{lr}
\text { Accounts receivable balance (January 1, 2018) } & \$ 16,000 \
\text { Cash balance (January 1,2018) } & 12,000
\end{array}$ Minimum cash balance is $20,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). How much cash would be collected in March from sales?
A)$32,000
B)$58,400
C)$48,000
D)$34,400

Quizplus · Accepted Answer

In March, cash collected from sales includes 65% of March sales and 35% of February sales. For March ($40,000 * 0.65 = $26,000) and for February ($24,000 * 0.35 = $8,400), totaling $26,000 + $8,400 = $34,400.

Mikhail Corporation Has the Following Sales Forecasts for the First