Question

The La Grange Corporation had the following budgeted sales for the first half of the current year: January February March April Cash Credit Sales Sales $40,000 $140,000 $ 45,000 $160,000 $ 42,000 $120,000 $37,000 $122,000 $ 47,000 $190,000 $70,000 $160,000 May June 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: 30% in month of sale 35% in month following sale 35% in second month following sale The accounts receivable balance on January 1 of the current year was $92,000, of which $70,000 represents uncollected December sales and $22,000 represents uncollected November sales. The total cash collected during January by LaGrange Corporation would be:

Answer 1

Answer IS 139,000 Working Notes: Cash collections during January by LaGrange Corporation Particulars Amount November receivables collections $ 22,000 December Month receivables collections $ 35,000 January Month Cash sales $ 40,000 January Month credit sales collections $ 42,000 Total collections during january Month $ 139,000 December Month receivables collections = $70,000*35/70 = $35000 January month credit sales collections = $140,000*30% = $42.000