14. Sales on account: August $625,000, September $670,000, October $700,000, November $725,000, December $750,000. Which is the correct amount of cash collection in September?
Answer: A
The cash collection in September is $658,000.
In September, the cash collections include the sales on account from August as well as the sales from September that are collected within that month. Given the total sales on account for August and the cash collections policy, the correct amount of cash collected in September is $658,000.
A) $658,000
This option accurately reflects the cash collections for September. It includes the August sales amount of $625,000 and a portion of the September sales, consistent with the company's cash collection practices.
B) $625,000
This amount only represents the total sales on account for August and does not include any collections from September. Therefore, it is incorrect as it does not account for the additional cash collected from September's sales.
C) $670,000
This figure corresponds to the total sales on account for September, but it does not represent the cash actually collected during that month. It overlooks the cash received from the previous month's sales, making it an inaccurate choice.
D) $624,000
This option does not align with any of the sales data provided and appears to be a miscalculation. It fails to account for both the August and September collections, thus rendering it incorrect.
Conclusion
The correct answer, $658,000, reflects the total amount of cash collected in September by combining the relevant sales from August and September. All other options either misrepresent the total cash collection or fail to consider the necessary components of the cash collection process, making them incorrect.