Question

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	$	27,000	$	150,000
April	$	22,000	$	107,000
May	$	32,000	$	220,000
June	$	100,000	$	10,000

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 $47,000 represents uncollected December sales and $18,000 represents uncollected November sales.

The total cash collected during January by LaGrange Corporation would be:

Answer 1

Cash collection budget
January
Collection from November sales	$      18,000.00
Collection from December sales	$      37,600.00
Collection from January cash sales	$      70,000.00
Collection from January Credit sales	$      85,000.00
Total cash collection during January	$    210,600.00

Balance of December accounts receivables is $47000, which is 50% of credit sales in December. 40% out of 50% will be collected in January and rest 10% will be collected in February.

Balance of Receivables for the month on November are 10% of uncollected amount of November sales which is fully collected in January.

Total Credit sale sof January is $170000 and 50% of this is collected in January. Rest 50% will be collected in next 2 months.