Boone Co's Sales, Based on Past Experience, Are 20% Cash and and 80

question 121

Multiple Choice

Boone Co.'s sales, based on past experience, are 20% cash and 80% credit. Credit sales are typically collected as follows: 40% in the month of sale, 50% in the month after the sale, and 10% in the second month following month of sale. On December 31, the accounts receivable balance is $54,000, of which $12,000 is from November sales. Total sales for January and February are budgeted to be $100,000 and $120,000, respectively.

What are Boone Co.'s budgeted cash receipts for February?

• A) $85,400.
• B) $95,000.
• C) $106,600.
• D) $109,400.
• E) $112,900.

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Definitions:

Economy

A system of production, distribution, and consumption of goods and services in a particular geographic region.

Demand

Demand is an economic principle referring to a consumer's desire and willingness to pay a price for a specific good or service.

Supply

The total amount of a specific good or service that is available to consumers, often influenced by the price as well as other factors.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers.