EA 14. How much cash will be collected in August, from June sales only, if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?

Question

EA 14.  How much cash will be collected in August, from June sales only, if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?

BlackTom AI · Accepted Answer

3.5% of June’s sales are collected in August, so compute 3.5% of $75,000.

Relevant knowledge points:
- Cash collections from sales are often spread over several months according to a fixed percentage schedule (e.g., a certain percent collected in the month of sale, a percent the next month, and a percent two months later).
- To find a percentage of an amount, convert the percent to a decimal (3.5% = 0.035) and multiply by the base amount.
- Break the multiplication into simpler parts to avoid errors.

Step-by-step calculation:
1. Convert 3.5% to a decimal: 3.5% = 3.5/100 = 0.035.
2. Multiply June sales ($75,000) by 0.035:
   - 75,000 × 0.03 = 2,250
   - 75,000 × 0.005 = 375
   - Sum: 2,250 + 375 = 2,625

All intermediate steps shown: 75,000 × 0.035 = 75,000 × (0.03 + 0.005) = 2,250 + 375 = 2,625.

Why this is correct:
- Given the company’s collection schedule (3.5% collected two months after the sale), the only portion of June sales that will be collected in August is 3.5% of the $75,000 June sales, which equals $2,625.

Why other interpretations would be wrong:
- Interpreting the problem as collecting 35% in August would yield $26,250 (75,000 × 0.35), which is ten times too large and inconsistent with a 3.5% two-month collection rate.
- Assuming full collection of June sales in August would give $75,000, which ignores the staged collection schedule.

Conclusion: The cash collected in August from June sales is $2,625, matching the provided answer.

EA 14. How much cash will be collected in August, from June sales only, if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?Numerical

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