Thirty percent of the company's sales are for cash and 70% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 20% are collected in the second month following sale. Given these data, cash collections for December should be:

$ 115,400

Step-by-step explanation:

Complete question is:

Budgeted sales in Allen Company over the next four months are given below: September              October                 November            December               $160,000                             $180,000                $120,000             $100,000

Thirty percent of the company's sales are for cash and 70% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 20% are collected in the second month following sale. Given these data, cash collections for December should be:

Cash collection in December for the month of October= 0.2 ×0.7 ×180000= 25200

Cash collected in Decmber for the month of November= 0.7×0.3×120000=252000

Cash collected in December for the month of December= 0.5×0.7×100000 + 0.3 × 100000= 65,000

Total cash collected in the month of December= 65,000+25,200 + 25,200= $ 115,400