CS Executive · Corporate Accounting and Financial Management · Forecasting Financial Statements
A firm's budgeted credit sales are April Rs 2,00,000, May Rs 3,00,000 and June Rs 4,00,000. Customers pay 40% in the month following the sale and 60% in the second month following the sale. Sales in March were Rs 1,00,000 and February Rs 1,50,000, on the same terms. What is the cash collected from debtors in May?
May collection is Rs 1,40,000: 40% of April sales (Rs 80,000) plus 60% of March sales (Rs 60,000).
- ARs 1,40,000
- BRs 1,60,000Correct
- CRs 1,80,000
- DRs 2,00,000
Explanation
May collection = 40% of April sales + 60% of March sales = 80,000 + 60,000 = Rs 1,40,000. Check: that is the sum, so the answer is 1,40,000 and not any other option.
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