The sales for October, November, and December are $2,000, $6,000 and $10,000, respectively. For any particular month of sales, the following percentages are received over time in cash for any given month:
20% in cash from that same month of sales; 50% in cash from the previous month's sales; and 30% in cash from the sales from two months ago. What percentage of cash will be received during December compared to the sales for December?
What will be an ideal response?
Answer: Cash received during or by the end of December is: 0.2 × December Sales + 0.5 × November Sales + 0.3 × October Sales = 0.3 × $2,000 + 0.5 × $6,000 + 0.2 × $10,000 = $600 + $3,000 + $2,000 = $5,600. The percentage of cash received during December is $5,600 / $10,000 = 0.5600 or 56.00%.
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