Fresplanade Co

question 18

Multiple Choice

Fresplanade Co. had the following historical collection pattern for its credit sales:

75% collected in the month of sale
12% collected in the first month after month of sale
8% collected in the second month after month of sale
3% collected in the third month after month of sale
2% uncollectible

The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below:
The estimated total cash collections by Fresplanade Co. during December from accounts receivable is:

• A) $113,160.
• B) $101,400.
• C) $143,640.
• D) $125,640.
• E) $102,420.

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Definitions:

Seasonality

Periodic fluctuations in economic or financial activity that recur with similar intensity during the same season of each year.

U.S. GDP

The total market value of all final goods and services produced within the United States in a given period, serving as a broad measure of overall economic activity.

Circular Flow Diagram

A visual model of the economy that shows how money flows through markets among households and firms, illustrating economic interactions.

Payments

Transactions or transfers of money or equivalents as a form of settling a debt or fulfilling an obligation.