. Mitchell Company had the following budgeted sales for the last half of last ye

Question

. Mitchell Company had the following budgeted sales for the last half of last year: July 50000 150000 August 55000 170000 September 45000 130000 October 50000 145000 Nov. 60000 200000 Dec. 80000 350000 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 credit sales: 60% in month of sale 30% in month following sale 10% in second month following sale Assume that the accounts receivable balance on July 1 was $75,000. Of this amount, $60,000 represented uncollected June sales and $15,000 represented uncollected May sales. Given these data, the total cash collected during July would be:

Explanation / Answer

200,000 x 60% = $120,000 from November credit sales
145,000 x 10% = $14500 from October credit sales
All credit sales before October will have been paid off by the end of November.


the total cash collected during July would be: $200,000.

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