Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted ata) $6,156,000
b) $5,319,000
c) $3,051,000
d) $4,428,000.

b) $5,319,000

Explanation:

If sales increases by 18,000 units each quarter over the year and Dolce Co. estimates its sales at 180,000 units in the first quarter

First quarter sales = 180,000 units

Second quarter sales = 180,000 + 18,000 = 198,000 units

Third quarter sales = 198,000 + 18,000 = 216,000 units

If 40% of the sales are for cash then automatically, 60% of the sales are on account.

Furthermore, if 70% of the credit customers (42% of sales) pay within the quarter, it means that 30% of the credit customers (18% of sales) will not pay until the quarter following.

As such, Cash collections for the third quarter will be made of 40% sales in that quarter, 42% of the sales in that quarter and 18% of the sales in the second quarter.

Cash collections for the third quarter

= (40% × 216,000 × $25) + (42% × 216,000 × $25) + (18% × 198,000 × $25)

= $5,319,000

the answer is d. many career choices to make.