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ABC Ltd sells to both cash and credit customers. Its expects that 40% of its sales will be paid in for cash and of the remainder, 50% will be paid the month after sale, 40% two months after sale and the rest will remain unpaid.
JAN- 100,000
FEB- 120,000
MAR- 140,000
APRIL- 150,000Forecast the amount of cash that will be received in the month of April.
In future, please do not simply set me a test question – you must have an answer in the same book in which you found the question.
You must tell me what problem you have with the answer, and then I will try and explain.In April you will receive 40% of the sales made in April – 40% x 150,000 = 60,000. Also, you will receive 50% of what was sold in March – 50% x 140,000 = 70,000. Also you will receive 40% of what was sold in Februaru – 40% x 120,000 = 48,000
So you just need to add together the three amounts.
Ok sir, I did same thing what you did but according to the answer sheet its
April receipts:
April sales 150,000×40% in cash 60,000
March sales 140,000×60%×50% 42000
February sales 120,000×60%×40% 28,800This question came from the previous mock exam made by Kaplan.
Ooops – my mistake
There is a trick in the question 🙂
It says 40% is paid in cash, and “of the remainder” 50% is one month after sale and 40% is two months after sale.
So if 40% is paid in case, then the remainder is the other 60%. 50% of those 60% are paid one month later.
Sorry 🙁
The auto-correct changed what I typed 🙂
What it should say is:
It says 40% is paid in cash, and “of the remainder” 50% is one month after sale and 40% is two months after sale.
So if 40% is paid in cash, then the remainder is the other 60%. 50% of those 60% are paid one month later and 40% of those 60% are paid two months later.
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