Question

The LaGrange Corporation had the following budgeted sales for the first half of the current year: Cash Sales Credit Sales January $ 50,000 $ 150,000 February $ 55,000 $ 170,000 March $ 43,000 $ 130,000 April $ 38,000 $ 123,000 May $ 48,000 $ 200,000 June $ 80,000 $ 170,000 The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: Collections on sales: 50% in month of sale 40% in month following sale 10% in second month following sale The accounts receivable balance on January 1 of the current year was $65,000, of which $42,000 represents uncollected December sales and $23,000 represents uncollected November sales. The total cash collected during January by LaGrange Corporation would be:

Answer 1

Answer:

$181,600

Explanation:

The computation of total cash is shown below:-

Working  Note :-

Credit sales of December

= $42,000 ÷ 50%

= $ 84,000  

Credit sale of November

= $23,000 ÷ 10%

= $ 230,000

Cash Collected from Credit sales

For January

= $150,000 x 50%

= $75,000

For December

= $84,000 x 40%

= $33,600

For November

= $230,000 x 10%

= $23,000

Total Cash collections from Credit sale  = January + November + December

= $75,000 + $33,600 + $23,000

= $131,600

Cash sale of January = $50,000

Total Cash collected in January  =  Total Cash collections from Credit sale  + Cash sale of January

= $131,600 + $50,000

= $181,600