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

Question

The LaGrange Corporation had the following budgeted sales for the first half of the current year: Cash Credit Sales $40,000 $140,000 $45,000 $160,000 $35,000 $120,000 $30,000 $115,000 $40,000 $190,000 $70,000 $ 90,000 Sales January February March April May June 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 45% in month following sale 15% in second month following sale The accounts receivable balance on January 1 of the current year was $66,000, of which $51,000 represents uncollected December sales and $15,000 represents uncollected November sales The total cash collected during January by LaGrange Corporation would be Multiple Choice $224,000 $194,000 $85,000 $149,250

Explanation / Answer

January Cash sales 40000 Credit sales: November 15000 December 38250 =51000/60*45 January 56000 =140000*40% Total cash collections 149250 Option 4 is correct

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