I need the details answers please. Richards Company had the following budgeted s

Question

   I need the details answers please.  Richards Company had the following budgeted sales for the first half<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

     of 19x7:

                       Cash Sales        Credit Sales

     January           $80,000           $350,000

     February           60,000            200,000

     March              50,000            145,000

     April              45,000            130,000

     May                55,000            170,000

     June               50,000            150,000

     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

1.      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. Give these data, the total cash collected during January would be:

2.      What is the budgeted accounts receivable balance on May 30?

Explanation / Answer

1) Total cash collected in January =

Cash sales in january + 60% of january's credit sales + 30% of decembers credit sales + 10% of november's credit sales.

A) Cash sales in January = 80,000

B) Credit sales collected in January = 350,000 x 60% = $210,000

C) Credit sales of December collected in January = 45,000

** This is a bit tricky because 60,000 remains from december. This 60,000 represents 40% of the credit sales in december. Therefore december credit sales were 60,000 / 0.40 = 150,000.

10% of the 150,000$ of sales will be collected in February, which is 15,000. So only 45,000 remains that is collectible in january

D) Credit sales of November collected in January = $10,000.

You can take this entire number because this is 2 months preceding the collection date, which means the remainder of november sales MUST be collected in January.

$80,000 + 210,000 + 45,000 + 10,000 = $345,000 ......ans

2) 81000

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