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The Model Company Is to Begin Operations in April

question 11

Multiple Choice

The Model Company is to begin operations in April. It has budgeted April sales of $30,000, May sales of $34,000, June sales of $40,000, July sales of $42,000, and August sales of $38,000. Note that 10% of each month's sales is expected to represent cash sales; 75% of the balance is expected to be collected in the month following the sale, 17% the second month, 6% the third month, and the balance is expected to be uncollectible.
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The Model Company is considering charging 1 1/2% on any balance that is not collected in the month following the month of sale. This charge would also change the collection percentages to 15% cash sales, 80% of the balance collected in the month following the sale, 16% the second month, and 3% the third month. This stricter credit policy will reduce the estimated sales budgets by 7% each month. Under this stricter credit policy, what is the amount of cash to be collected in July? Round all calculations to the nearest whole dollar.

Definitions:

E-evidence

Digital evidence stored on electronic devices, used in court to support legal claims or defenses.

Default Judgment

A judgment entered by a court against a defendant who has failed to appear in court to answer or defend against the plaintiff’s claim.

Affirmative Defense

A response to a plaintiff’s claim that does not deny the plaintiff’s facts but attacks the plaintiff’s legal right to bring an action. An example is the running of the statute of limitations.

Negligence

The failure to exercise the standard of care that a reasonable person would exercise in similar circumstances.