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:

Credit Sales

Transactions where the buyer is allowed to pay for goods or services at a later date, extending credit by the seller.

Cash Collections

The process of gathering and managing the cash received from sales, services, or other receivables.

Income Tax Expense

The cost to a company for income taxes owed to federal, state, and local governments, recorded as a financial expense in accounting.

Federal Income Taxes

Taxes levied by the federal government on annual income earned by individuals, corporations, trusts, and other legal entities.