Question 1

A company's sales are 30% cash and 70% credit. Credit sales are collected: 60% in the month of sale, 30% in the month following, and 10% in the second month following.
Sales data:
January: $100,000
February: $120,000
March: $150,000

Calculate the total cash collections expected in March.

Accepted Answer

Break down sales into Cash and Credit. Map the credit collection percentages to the months. Sum the components collected in the target month.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Applying collection percentages to Total Sales instead of Credit Sales; missing the cash sales component.

How to approach this question

Full Answer

Common mistakes

Practice the full CPA BAR Practice Exam 2

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