Michael Ltd Sixty-Five Per Cent of Sales Are Collected in the Month

question 52

Multiple Choice

Michael Ltd. has the following sales forecasts for the first three months of 2011: $$\begin{array} { l c } \text { Month } & \text { Sales } \\\text { January } & £ 36,000 \\\text { February } & 24,000 \\\text { March } & 40,000\end{array}$$ Sixty-five per cent of sales are collected in the month of the sale and the remainder are collected in the following month. $\begin{array}{lr}\text { Accounts receivable balance (January 1,2011) } & £ 16,000 \\\text { Cash bal ance (January } 1,2011) & 12,000\end{array}$ Minimum cash balance is £20,000. Cash can be borrowed in £1,000 increments from the local bank (assume no interest charges) . How much cash would be collected in March from sales?

• A)£32,000
• B)£58,400
• C)£48,000
• D)£34,400

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Definitions:

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