Question

The LaGrange Corporation had the following budgeted sales for the first half of the current year:...

The LaGrange Corporation had the following budgeted sales for the first half of the current year:

Cash Sales Credit Sales
January $ 70,000 $ 170,000
February $ 75,000 $ 190,000
March $ 49,000 $ 150,000
April $ 44,000 $ 129,000
May $ 54,000 $ 220,000
June $ 100,000 $ 230,000

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:

40% in month of sale

30% in month following sale

30% in second month following sale

The accounts receivable balance on January 1 of the current year was $77,000, of which $48,000 represents uncollected December sales and $29,000 represents uncollected November sales.

The total cash collected during January by LaGrange Corporation would be

Multiple Choice:

  • $301,000

  • $255,000

  • $80,000

  • $191,000

NOTE- Please show how you reached your answer! Thank you in advance!

Business   Accounting   
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Homework Answers

Answer #1
Answer
The Correct Option is D : $ 191,000
Explanation

Cash sales

 $        70,000
Credit sales:
Collection from November sales $        29,000
Collection from December sales $        24,000 48000/60%*30%
Collection from January sales $        68,000 170000*40%
Total cash collected during January $      191,000
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