Answer to Question #270637 in Finance for Maika Togavuto

Question

Do-Re-Mi Ltd is a retailer of musical instruments and has the following historical collection pattern for its credit sales:

 70 per cent collected in the month of sale.

 15 per cent collected in the first month after sale.

10 per cent collected in the second month after sale.

4 per cent collected in the third month after sale.

 1 per cent uncollectable.

The credit sales have been budgeted for the last seven months of the year, as shown below:

June

$55 000

July

60 000

August

70 000

September

80 000

October

90 000

November

100 000

December

85 000

 

Required

1.    Calculate the estimated total cash receipts during October from credit sales

2.    Calculate the estimated total cash receipts during the December quarter from credit sales during the quarter.

Answer 1

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