Richards Corporation has the following budgeted sales for the first half of next

Question

Richards Corporation 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: The accounts receivable balance on January 1 is $68,000. Of this amount, $54,000 represents uncollected December sales and $14,000 represents uncollected November sales. The total cash collected during January would be: $12,000 $241,000 $300,000 $229,000

Explanation / Answer

Solution.

Preparetion of cash budget.

* December Credit sales (54,000 / 45 ) x 30 = 36,000

November Credit sales                              = 14,000

Total                                                               = 30,200

Month Amount Jan Cash sales      80,000.00 Credit Sales: Opening Receivable      50,000* Jan 180,000.00      99,000.00 Feb 200,000.00 Mar 160,000.00 Apr 136,000.00 May 230,000.00 Jun 260,000.00 Total Collection    209,200.00

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