A Company Collects 60% of Its Sales During the Month

question 17

Multiple Choice

A company collects 60% of its sales during the month of the sale, 30% one month after the sale, and 10% two months after the sale. The company expects sales of $10,000 in August, $20,000 in September, $30,000 in October, and $40,000 in November. How much money is expected to be collected in October?

• A) $25,000
• B) $15,000
• C) $35,000
• D) None of the above

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Definitions:

Journal Entry

A record in accounting that represents a transaction in which there has been a change in the value of the company's assets, liabilities, or equity.

Installation Costs

Expenses associated with setting up or installing equipment, machinery, or software, making them ready for use.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for non-cash transactions, indirect expenses, and changes in working capital.

Depreciation Expense

A technique in accounting that involves spreading out the expense of a physical asset over its expected lifespan.