Cash budgets

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% 28,800 This question came from the previous mock exam made by Kaplan.

I am confused because I don't know where the 60% came from.

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 :-(

Sir repeat again why do we multiply the 60% with 50% and 40%?

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.

Ah ok sir now i get it! Thank u so much sir! :)

You are welcome :-)