Answer (A) is correct . The second calendar quarter consists of April, May, and June. For April’s sales of $120,000, collections should be 95% (70% + 15% + 10%), or $114,000. For May’s sales of $100,000, collections should be 85% (70% + 15%), or $85,000. For June’s sales of $90,000, collections should be 70%, or $63,000. The quarterly total is $262,000 ($114,000 + $85,000 + $63,000).
Answer (B) is incorrect because The amount of $288,800 includes cash collections from sales made during the first calendar quarter.
Answer (C) is incorrect because The amount of $306,900 is 99% of the total sales made during the second calendar quarter. It is the amount estimated to be collected during the calendar year, not just the second quarter.
Answer (D) is incorrect because The total sales budgeted for the second calendar year is $310,000.
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Birch’s estimated total cash collections during the second calendar quarter from sales made on open account during the second calendar quarter are
