Laura’s Dress Delivery operates a mail-order business that sells clothes designe
ID: 2415099 • Letter: L
Question
Laura’s Dress Delivery operates a mail-order business that sells clothes designed for frequent travelers. It had sales of $800,000 in December. Because Laura’s Dress Delivery is in the mail-order business, all sales are made on account. The company expects a 30 percent drop in sales for January. The balance in the Accounts Receivable account on December 31 was $120,000 and is budgeted to be $82,000 as of January 31. Laura’s Dress Delivery normally collects accounts receivable in the month following the month of sale.
Determine the amount of cash Laura’s Dress Delivery expects to collect from accounts receivable during January.
Laura’s Dress Delivery operates a mail-order business that sells clothes designed for frequent travelers. It had sales of $800,000 in December. Because Laura’s Dress Delivery is in the mail-order business, all sales are made on account. The company expects a 30 percent drop in sales for January. The balance in the Accounts Receivable account on December 31 was $120,000 and is budgeted to be $82,000 as of January 31. Laura’s Dress Delivery normally collects accounts receivable in the month following the month of sale.
value: 10.00 points Laura's Dress Delivery operates a mail-order business that sells clothes designed for frequent travelers. It had sales of $800,000 in December. Because Laura's Dress Delivery is in the mail-order business, all sales are made on account. The company expects a 30 percent drop in sales for January. The balance in the Accounts Receivable account on December 31 was $120,000 and is budgeted to be $82,000 as of January 31. Laura's Dress Delivery normally collects accounts receivable in the month following the month of sale. Required: a. Determine the amount of cash Laura's Dress Delivery expects to collect from accounts receivable during January. pected cash collectionExplanation / Answer
Here is the answer-
December Sales=$800,000
January Sales(30% drop in sales of dec)=800,000*70%= $560,000
January cash collections :
December credit sales=$120,000 collwcted in January month
January credit sales=560,000 - 82,000(AR os January)= $478,000 cash collected
Total = $598,000 is the cash collected in January.
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