Question

The accounts receivable balance on January 1 of the current year was $82,000, of which $63,000 represents uncollected December sales and $19,000 represents uncollected November sales.The total cash collected during January by LaGrange Corporation would be:a. $190,000b. $192,000c. $140,000d. $216,000

Answer 1

Answer:

Option (b) is correct.

Explanation:

Cash sales in January = $40,000

Credit sales = $140,000

Account receivable balance of December (in Jan 1 balance) should be:

= 45% of December credit sales and,

only 40% of December credit sales will be collected in January.

The amount collected in January will be:

= $63,000 × (40%/45%)

= $56,000

Total cash collected during January:

= Cash sales in January + 55% of credit sales in January + Amount collected from November sales + Amount collected from December sales

= $40,000 + (55% × $140,000) + $19,000 + $56,000

= $192,000

Note: Missing part of this question is attached with the answer.