Question

Woodpecker Co. has $298,000 in accounts receivable on January 1. Budgeted sales for January are $992,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are

a.$654,960

b.$1,091,600

c.$873,280

d.$1,389,600

Answer 1

Ans.	Option B $1,091,600
	Schedule of Cash receipt In January
		January
	Cash receipts from:
	Cash sales	$198,400
	Accounts receivable	$298,000
	From January month's credit sales	$595,200
	Total budgeted cash receipts	$1,091,600
	*WORKING NOTES :
	*Cash sales = Total sales * 20%
	$992,000 * 20%
	$198,400
	*Credit sales = Total sales * 80%
	$992,000 * 80%
	$793,600
	*75% of credit sales will be collected in the month of January.
	Collection from January month's credit sales = $793,600 * 75%
	$595,200
	*Remaining 25% of credit sales will be collected in next month February.