ExpertMedium2 marksMultiple Choice
ACCA · Question 17 · Budgeting
Section A
AgriCorp expects sales of $100,000 in March, $120,000 in April, and $150,000 in May. Customers pay 40% in the month of sale, 50% in the month following the sale, and 8% two months after the sale (2% are bad debts). What are the expected cash receipts from sales in May?
Section A
AgriCorp expects sales of $100,000 in March, $120,000 in April, and $150,000 in May. Customers pay 40% in the month of sale, 50% in the month following the sale, and 8% two months after the sale (2% are bad debts). What are the expected cash receipts from sales in May?
Answer options:
A.
$150,000
B.
$128,000
C.
$120,000
D.
$130,000
How to approach this question
Calculate the cash collected in May from May's sales, April's sales, and March's sales based on the given percentages. Sum them up.
Full Answer
B.$128,000✓ Correct
Cash receipts in May: From May sales: 40% * $150,000 = $60,000. From April sales: 50% * $120,000 = $60,000. From March sales: 8% * $100,000 = $8,000. Total = $60,000 + $60,000 + $8,000 = $128,000. Bad debts do not result in cash flow.
Common mistakes
Including bad debts as cash, or misaligning the months.
Practice the full ACCA MA — Management Accounting Practice Exam 3
38 questions · hints · full answers · grading
More questions from this exam
Q01Section A
GlobalHealth NGO is evaluating the effectiveness of its recent vaccination drive in ru...EasyQ02Section A
Quantum AI, a tech startup, classifies its costs to better understand cost behavior. S...MediumQ03Section A
MetroWater, a public utility company, uses sampling to test water quality. An automate...EasyQ04Section A
AgriYield Corp is analyzing the relationship between the amount of specialized fertili...MediumQ05Section A
TransGlobal Logistics uses time series analysis to forecast shipping volumes. The unde...Medium