Munson Company reported the following information for 2010:
$\bullet$

All sales are on credit.
$\bullet$Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
How much cash will Munson receive in November?
A) $290,000
B) $650,000
C) $600,000
D) $580,000

Question

Munson Company reported the following information for 2010:
$\bullet$

All sales are on credit.
$\bullet$Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
How much cash will Munson receive in November?
A) $290,000 
B) $650,000 
C) $600,000 
D) $580,000

Quizplus · Accepted Answer

Munson Company will receive 50% of the amounts due from customers for September sales in October and the remaining 50% in November. Similarly, Munson will receive 50% of the amounts due from customers for October sales in November and the remaining 50% in December. Therefore, in November, Munson will receive the remaining 50% of the amounts due from customers for September sales and the first 50% of the amounts due from customers for October sales. This totals to $600,000 (50% of $600,000 for September sales + 50% of $600,000 for October sales). Thus, the correct answer is C.

Munson Company Reported the Following Information for 2010 ∙\bullet∙ All Sales Are on Credit

Munson Company Reported the Following Information for 2010 $\bullet$ All Sales Are on Credit