IP Company’s sales are 20% paid in cash and 80% are on credit collected in full in the month following the sale. If IP’s last month’s sales were $75,000 and their current month’s sales are $100,000, how much cash is collected during the current month?

$76,250

Explanation:

20% paid in cash, and 80% paid in credit

If this month's sales are $100,000, 20% will be collected cash

20 % of $100, 000 is 20/100 x 100,000

=0.2 x $100,000

=$20,000

collection from last months sales will be 75% of $75,000

=75/100 x 75,000

=.75 x 75,000

=$56,250

Total collection = $20,000 + $56 250

=$76,250

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