Question
Asked Dec 9, 2019
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Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $247,000, $303,000, and $413,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.

The cash collections expected in October are

a.$268,480
b.$219,080
c.$290,400
d.$279,680
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Expert Answer

Step 1

Cash Collection

Cash collection are the combination of current month’s cash sales and the credit sales of the previous month. Cash collection is a function of account receivable. Cash collection is the recovery of cash from a business or individual with which invoice are issued.

Step 2

Calculation of cash collection expected in the...

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September October November Budgeted Sales $247,000 $303,000 $413,000 Cash Sales (25% of Budgeted sales) $61,750 $103,250 $75,750 Credit sales for the month (75% of Budgeted sales) $185,250 $227,250 $309,750 Collection for October Particulars Amount ($) $75,750 $159,075 Cash sales Credit Sales of October collection ($227,250×70%) Credit Sales of September collection ($185,250×30%) Total Collection in October $55,575 $290,400

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