As of December 31, Budget, Inc. had a cash balance of $50,000. December sales were $150,000 and are expected to be $100,000 in January. 20% of sales in any month are cash sales, and 80% of sales are collected during the following month. In January, Budget is expected to have total cash disbursements of $120,000, and Budget requires a minimum cash balance of $50,000. Budget's expected cash receipts for January are

Question

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Budget's expected cash receipts for January include cash sales for January and collections from December sales. January cash sales are 20% of $100,000, which equals $20,000. Collections from December sales are 80% of $150,000, which equals $120,000. Therefore, total expected cash receipts for January are $20,000 + $120,000 = $140,000.