Orion Corporation is preparing a cash budget for the six months beginning January 1.Shown below are the company's expected collection pattern and the budgeted sales for the period:
Expected collection pattern:
65% collected in the month of sale
20% collected in the month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
Budgeted Sales:
$\begin{array}{|l|r|}
\hline \text { Tanuary } & \$ 160,000 \
\hline \text { February } & 185,000 \
\hline \text { March } & 190,000 \
\hline \text { April } & 170,000 \
\hline \text { May } & 200,000 \
\hline \text { June } & 180,000 \
\hline
\end{array}$
What would be the estimated total cash collections during April from sales and accounts receivables?

Question

Quizplus · Accepted Answer

To calculate the estimated total cash collections during April from sales and accounts receivables, we need to consider the collection pattern and apply it to the sales from January, February, March, and April. - From April sales (170,000), 65% is collected in April: $170,000 \times 0.65 = 110,500$- From March sales (190,000), 20% is collected in April: $190,000 \times 0.20 = 38,000$- From February sales (185,000), 10% is collected in April: $185,000 \times 0.10 = 18,500$- From January sales (160,000), 4% is collected in April: $160,000 \times 0.04 = 6,400$Adding these amounts gives the total cash collections during April:$110,500 + 38,000 + 18,500 + 6,400 = 173,400$Therefore, the estimated total cash collections during April from sales and accounts receivables is $173,400.

Orion Corporation Is Preparing a Cash Budget for the Six