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Kaspar Industries-Compute cash collections from customers for each month.

Kaspar Industries expects credit sales for January, February, and March to be $205,100, $263,100, and $314,500, respectively. It is expected that 75% of the sales will be collected in the month of sale, and 25% will be collected in the following month.
Compute cash collections from customers for each month.

Solution:

Collections from Customers
Credit SalesJanuaryFebruaryMarch
January         153,825               51,275
February             197,325               65,775
March             235,875
Total         153,825             248,600             301,650

Calculation:

January = $205,100 x 75% = $153,825

February = $263,100 x 75% + 205,100 x 25% (January’s Sales) = 197,325 + 51,275 = $248,600

March = $314,500 x 75% + 263,100 x 25% (February’s Sales) = 235,875 + 65,775 = $301,650

Kaspar Industries expects credit sales for January, February, and March to be $205,100, $263,100, and $314,500, respectively. It is expected that 75% of the sales will be collected in the month of sale, and 25% will be collected in the following month.
Compute cash collections from customers for each month.

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