The Khaki Company has the following budgeted sales data:$\begin{array}{lrr}
&\text { January}&\text { February}&\text { March }&\text {April }\
\text {Credit Sales } &£ 400,000& £ 350,000& £ 300,000 &£ 320,000\
\text {Cash Sales } &£ 70,000 &£ 90,000 &£ 80,000& £ 70,000\
\end{array}$

The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month following sale, and the remainder in the second month following the month of sale. There are no bad debts. The budgeted cash receipts for April would be

A)£350,000.
B)£320,000.
C)£313,000.
D)£383,000.

Question

The Khaki Company has the following budgeted sales data:$\begin{array}{lrr}
&\text { January}&\text { February}&\text { March }&\text {April }\
  \text {Credit Sales  } &£ 400,000& £ 350,000& £ 300,000 &£ 320,000\
 \text {Cash Sales  } &£ 70,000 &£ 90,000 &£ 80,000& £ 70,000\
\end{array}$

The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month following sale, and the remainder in the second month following the month of sale. There are no bad debts. The budgeted cash receipts for April would be

A)£350,000.
B)£320,000.
C)£313,000.
D)£383,000.

Quizplus · Accepted Answer

For April, the cash receipts include April's cash sales, 40% of April's credit sales, 50% of March's credit sales, and the remaining 10% of February's credit sales. Calculating these: April cash sales = £70,000; 40% of April credit sales = 0.40 * £320,000 = £128,000; 50% of March credit sales = 0.50 * £300,000 = £150,000; 10% of February credit sales = 0.10 * £350,000 = £35,000. Adding these together gives £70,000 + £128,000 + £150,000 + £35,000 = £383,000.

The Khaki Company Has the Following Budgeted Sales Data The Regular Pattern of Collection of Credit Sales Is 40