81. CSO: 1A4b LOS: 1A4x
Health Foods Inc. has decided to start a cash budgeting program to improve overall cash
management. Information gathered from the past year reveals the following cash
collection trends.
40% of sales are on credit
50% of credit sales are collected in month of sale
30% of credit sales are collected first month after sale
15% of credit sales are collected second month after sale
5% of credit sales result in bad debts
Gross sales for the last five months were as follows.
January $220,000
February 240,000
March 250,000
April 230,000
May 260,000
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Sales for June are projected to be $255,000. Based on this information, the expected cash
receipts for March would be
a. $230,000.
b. $237,400.
c. $242,000.
d. $243,200.
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