The Company Is in the Process of Preparing a Cash

question 52

Multiple Choice

$\begin{array}{lrr}&\text { Cash Sales } & \text { Credit Sales }\\ \text { July } &£ 50,000 &£ 150,000\\ \text { August. } &55,000 & 170,000\\ \text { September } &45,000 &130,000\\ \text { October } &50,000 &145,000\\ \text { November } &60,000 & 200,000\\ \text { December } &80,000 &350,000\\\end{array}$
The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:Collections on credit sales:
$60 \%$ in month of sale
$30 \%$ in month following sale
$10 \%$ in second month following sale
- What is the budgeted accounts receivable balance on December 1

• A)£ 80,000.
• B)£140,000.
• C)£ 94,500.
• D)£131,300.

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Definitions:

Probability Ranges

A statistical measure that estimates the range within which the value of a variable or outcome will fall, given a certain level of confidence.

Normal Distribution

A symmetric, bell-shaped frequency distribution that can be defined by its mean and standard deviation.

Percentage Return

The profit or deficit achieved on an investment over a designated duration, measured as a percentage of the investment’s initial value.

Bond

A fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.