Question

Morgan Company's budgeted income statement reflects the following amounts: sales Purchases Expenses January $121,000 $79,000 24,100 February 111,000 March April 67,000 24,300 82,250 85,500 126,000 131,000 27,100 28,700 Sales are colected 50% in the month of sale, 25% in the month following sale. and 24% in the second month following sale. One percent of sales is uncollectible and expensed at the end of the year. Morgan pays for all purchases in the month following purchase and takes advantage of a 2% discount. The following balances are as of January 1: Canh $89,000 Accounts receivable 59,000 Accounts payable 73,000 Of this balance, $29,500 will be collected in January and the remaining amount will be collected in February. The monthly expense figures include $5,100 of depreciation. The expenses are paid in the month incurred. Morgan's budgeted cash receipts in February are: Multiple Choice $8S,750. $89,750. $115,250,

Answer 1

Answer:

$115,250

Explanation:

The computation of the budgeted cash receipts in February month is shown below:

= Sales collected in February month + sales collected in January month - balance in accounts receivable

where,

Sales collected in February month equals to

= $111,000 × 50%

= $55,500

Sales collected in January month equals to

= $121,000 × 25%

= $30,250

And, the balance of accounts receivable

= $59,000 - $29,500

= $29,500

Now put these values to the above formula  

So, the value would equal to

= $55,500 + $30,250 + $29,500

= $115,250