All of Gaylord Corporation's Sales Are on Account

question 114

Multiple Choice

All of Gaylord Corporation's sales are on account.Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale.The following are budgeted sales data for the company: What is the amount of cash that should be collected in March?

• A)$24,000
• B)$37,000
• C)$41,000
• D)$51,000

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Definitions:

Effective-Interest Method

A method of calculating interest that considers the compounding of interest, making it a more accurate measure of interest expense or income over the life of a financial instrument.

GAAP

Generally Accepted Accounting Principles, a standard framework of guidelines for financial accounting used in any given jurisdiction.

Bond Discounts

The financial difference observed when a bond's selling price is less than its stated face value upon sale.

Effective-Interest Method

A way of calculating the amortized cost of a bond and the amount of interest expense over its relevant period.