The LaGrange Corporation had the following budgeted sales for the first half of
ID: 2594297 • Letter: T
Question
The LaGrange Corporation had the following budgeted sales for the first half of the current 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 sales:
45% in month of sale
35% in month following sale
20% in second month following sale
The accounts receivable balance on January 1 of the current year was $71,000, of which $55,000 represents uncollected December sales and $16,000 represents uncollected November sales.
What is the budgeted accounts receivable balance on May 31?
Multiple Choice
$115,800
$110,000
$131,800
$247,600
Cash Sales Credit Sales January $ 50,000 $ 150,000 February $ 55,000 $ 170,000 March $ 29,000 $ 130,000 April $ 24,000 $ 109,000 May $ 34,000 $ 200,000 June $ 80,000 $ 30,000Explanation / Answer
Collection patterm - 45% in month of sale, 35% in month following sale and 20% in second month following sale
Budgeted accounts receivable balance on May 31 = 20% of April sales + 55%(35%+20%) of May sales
= (109,000*20%) + (200,000*55%)
= 21,800 + 110,000
= 131,800
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