The Johann's Professional Service Company expects 70% of sales for cash and 30% on credit. The company collects 80% of its credit sales in the month following sale, 15% in the second month following sale, and 5% are not collected. Expected sales for June, July, and August are $54,000, $48,000, and $44,000, respectively. What are the company's expected total cash receipts in August?
A. $45,920.
B. $61,400.
C. $87,600.
D. $54,200.
Correct answer is option A. $45,920.
Explanation:
$45,920 = ($44,000 `\times` 0.7) + ($54,000 `\times` 0.3 `\times` 0.8) + ($48,000 `\times` 0.3 `\times` 0.15)
Thus,$45,920 is the company's expected total cash receipts in August.
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