Question

Kam Department Store reported the following information for 2016: October November December Budget sales$1,240,000$1,160,000$1,440,000 All sales are on credit Customer amounts on account are collected 50% in the month of sale and 50% in the following month How much cash will Kam receive in November?a) $580,000. b) $1,300,000. c) $1,200,000. d) $1,160,000.

Answer 1

Answer:

C

Explanation:

In this question, we are asked to state the amount of money that Kam receive in November.

To answer this question, a proper understanding of the mode of collection of the amount is required. From the question, we can see that all sales are on credit and that customers pay 50% in the month of purchase and 50% in the month after the purchase was made. Hence, this means that we are considering the month of October alongside the month of November.

She will collect 50% of October money in November and also collect 50% of November money in November. What we need to find is the total amount of money she would be collecting.

For October, we start with 50% of $1,240,000 = 50/100 * 1240000 = $620,000

For November, amount collected would be 50% of 1,160,000 = $580,000

The total amount collected in the month of November will be $580,000 + $620,000 = $1,200,000