Zale, Inc has provided the following extracts from their budget for the first quarter of the forthcoming year
Jan Feb March
Sales (20% cash) $500,000 $750,000 $1,000,000
The company collects 70% of credit sales in the same month and the balance in the next month. Calculate the collections from the customers for the month of February.
A) $570,000
B) $540,000
C) $690,000
D) $750,000
C .C)
Feb
Collection for cash sale ($750,000 x 20%) $150,000
Collection for credit sale:
For Feb. sales ($750,000 x 80% x 70%) 420,000
For Jan. sales ($500,000 x 80% x 30%) 120,000
Total cash collection $690,000
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