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Mambo Inc. has credit sales of $140,000 in May, $170,000 in June, and $190,000 in July. Mambo collects cash on account 70% in the month of sale and 30% in the month following the sale. What would the cash collections be for June

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Answer: $161,000

Explanation:

Mambo collects cash on account 70% in the month of sale and 30% in the month following the sale.

This means that in June, Mambo will collect 70% of the June credit sales in addition to 30% of May's sales.

June's collections are therefore:

= (70% * June sales) + (30% * May sales)

= (170,000 * 70%) + (140,000 * 30%)

= 119,000 + 42,000

= $161,000

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