The sales budget of Mulls Company for the fourth quarter of 2009 is as follows
|
Sales
|
October
|
November
|
December
|
|
|
$96,000
|
$72,000
|
$108,000
|
Sales are 20% cash (20% of 108,000 is 21,600) and 80% credit (accounts receivable).
Collections on credit sales are as follows:
50% in the month of sale
30% in the month following sales
15% in the second month following sale
5 % uncollectible
Payments for inventory are 70% in the month following purchase and 30% two months following purchase.
Compute the cash collections for December