Answer (C) is correct . If 50% of sales are collected in the month of sale and 45% in the next month, with the balance uncollectible, collections during the third quarter will be based on sales during June, July, August, and September. As calculated below, total budgeted collections are $414,000. June: $120,000 ¡Á 45% = $??54,000 July: 140,000 ¡Á (50% + 45%) = 133,000 August: 160,000 ¡Á (50% + 45%) = 152,000 September: 150,000 ¡Á 50% = 75,000 Total $414,000
Answer (A) is incorrect because The total cash expected to be collected from third calendar quarter sales is $427,500.
Answer (B) is incorrect because The budgeted cash collections for August through October, not the third calendar quarter, is $422,500.
Answer (D) is incorrect because The total budgeted sales for the third calendar quarter is $450,000.
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Normal cash collection experience has been that 50% of sales are collected during the month of sale and 45% in the month following sale. The remaining 5% of sales is never collected. DeBerg’s budgeted cash collections for the third calendar quarter are