Problem
Mitchell Company had the following budgeted sales for the first half of next year:
|
|
Cash Sales
|
Credit Sales
|
|
January
|
$50,000
|
$150,000
|
|
February
|
$55,000
|
$170,000
|
|
March
|
$39,000
|
$130,000
|
|
April
|
$44,000
|
$139,000
|
|
May
|
$54,000
|
$200,000
|
|
June
|
$80,000
|
$290,000
|
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 credit sales:
40% in month of sales
30% in month of following sales
30.0% in second month following sales
Assume that the accounts receivable balance on January 1 was $65,000. Of this amount, $54,000 represented uncollected December sales and $11,000 represented uncollected November sales. Given these data, what would be the total cash collected during January.