The management of Lesley empire co.

estimates that credit sales for January, February, March and April will
be $180,000, $210,000, $230,000, and $160,000,
respectively. Experience has shown that collections are made as follows:
In month of sale 25%
In first month after sale 60%
In second month after sale 10%

The collections from customers in march is

Selected Answer: A.
$210500
Answers: A.
$210500
B.
$194000
C.
$206500
D.
$230000

Expert Answer
Step 1
Given,

January Sales is $180,000

February Sales is $210,000

March Sales is $230,000

April Sales is $160,000

Step 2
Computing collection in the month of march as:

March
January Sales ($180,000 ×10%) $18,000
February Sales ($210,000 ×60%) $126,000
March Sales ($230,000 ×25%) $57,500
Aggregate collections $201,500

Therefore, the total collections in the March month amounts to $201,500.

The sale of January is collected in the months of January (sale month) (25%),
February (1st month) (60%) and March (2nd month) (10%), sale of February is
collected in the months of February (sale month) (25%), March (1st month) (60%)
and April (2nd month) (10%). And lastly, the March sales is collected in the months
of March (sale month) (25%), April (1st month) (60%) .