A Company Is Formulating Its Plans for the Coming Year,including

question 59

Multiple Choice

A company is formulating its plans for the coming year,including the preparation of its cash budget.Historically,the company's sales are 30% cash.The remaining sales are on credit with the following collection pattern:
$$\begin{array} { | l | c | } \hline \text { Collections on Account } & \text { Percentage } \\\hline \text { In the month of sale } & 40 \% \\\hline \text { In the month tollowing the sale } & 58 \% \\\hline \text { Uncollectible } & 2 \% \\\hline\end{array}$$
Sales for the first 5 months of the coming year are forecast as follows:
$$\begin{array} { | l | r | } \hline \text { January } & \$ 3,500,000 \\\hline \text { February } & 3,800,000 \\\hline \text { March } & 3,600,000 \\\hline \text { April } & 4,000,000 \\\hline \text { May } & 4,200,000 \\\hline\end{array}$$ For the month of April,the total cash receipts from sales and collections on account would be: (CIA adapted)

• A) $3,729,968.
• B) $3,781,600.
• C) $4,025,200.
• D) $4,408,000.

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Definitions:

Red Income

This term is also not recognized in standard economic discussions and might be used in a specific context that is not universally defined.

Ambrosia

Often referred to in ancient texts, ambrosia is described as a divinely nourishing substance associated with immortality.

Blue Income

Similar to "Red Income," this term does not have a recognized definition in economics and likely pertains to a specific, non-standard use.

Ambrosia

In mythology, it is the food or drink of the gods, thought to confer immortality, but in a general context, it refers to something very pleasing to taste or smell.