Richards Company has the following budgeted sales for the first half of next year: 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 credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
-Assume that the accounts receivable balance on January 1 is $70,000. Of this amount, $60,000 represents uncollected December sales and $10,000 represents uncollected November sales. Given these data, the total cash collected during January would be:

Question

Richards Company has the following budgeted sales for the first half of next year:  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 credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
-Assume that the accounts receivable balance on January 1 is $70,000. Of this amount, $60,000 represents uncollected December sales and $10,000 represents uncollected November sales. Given these data, the total cash collected during January would be:

Quizplus · Accepted Answer

The total credit sales for January and February are $360,000 and $380,000, respectively. Using the collection percentages provided, the cash collections for January are:
- 60% of $200,000 (sales made in January) = $120,000
- 30% of $160,000 (sales made in December) = $48,000
- 10% of $20,000 (sales made in November) = $2,000

In addition, the company has $70,000 in accounts receivable at the beginning of January, of which $60,000 is from December sales and $10,000 is from November sales. Therefore, the total cash collected in January would be:
$120,000 + $48,000 + $2,000 + $10,000 = $180,000 + $10,000 = $190,000

Therefore, the correct answer is C) $345,000.

Richards Company Has the Following Budgeted Sales for the First