Question

The lagrange corporation had the following budgeted sales for the first half of the current year: cash sales credit sales january $70,000 $340,000 february $50,000 $190,000 march $40,000 $135,000 april $35,000 $120,000 may $45,000 $160,000 june $40,000 $140,000 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: 60% in month of sale 30% in month following sale 10% in second month following sale the accounts receivable balance on january 1 of the current year was $70,000, of which $50,000 represents uncollected december sales and $20,000 represents uncollected november sales. The total cash collected during january by lagrange corporation would be:

Answer 1

Assuming $20,000 represents uncollected november sales. The total cash collected during january by lagrange corporation would be:$331.500.

Total cash collected

First step

Total Credit Sales in December= $50,000/40%

Total Credit Sales in December= $125,000

Second step

Total cash collected during January = Cash sales of January + (60% x Credit sales of January) + (30% x Credit sales of December)+ Uncollected November sales

Let plug in the formula

Total cash collected during January = $70,000 + (60% x $340,000) + (30% x $125,000) + $20,000

Total cash collected during January=$70,000+204,000+37,500+$20,000

Total cash collected during January=$331,500

Inconclusion the total cash collected during january by lagrange corporation would be:$331.500.

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