The LaGrange Company had the following budgeted sales for the first half of the current year: Credit Sales $340,000 $190,000 $135,000 $120,000 $160,000 $140,000 Cash Sales $70,000 $50,000 $40,000 $35,000 $45,000 $40,000 January February March April May June 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 The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales. 2. What is the budgeted accounts receivable balance on June 1 of the current year? $ 56,000. $ 64,000. $ 76,000. $132,000. A)

The LaGrange Company had the following budgeted sales for the first half of the current year: Credit Sales $340,000 $190,000 $135,000 $120,000 $160,000 $140,000 Cash Sales $70,000 $50,000 $40,000 $35,000 $45,000 $40,000 January February March April May June 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 The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000 represents uncollected December sales and $20,000 represents uncollected November sales. 2. What is the budgeted accounts receivable balance on June 1 of the current year? $ 56,000. $ 64,000. $ 76,000. $132,000. A)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Orange Company has sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000, $80,000, and $100,000, respectively. The firm has a cash balance of $5,000 on 1 May and wishes to maintain a minimum cash balance of $5,000. Given the following data, prepare and interpret a cash budget for the months of May, June, and July. • The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second month following sale • The firm recelves other income of $2,000 per month • The firm's actual or expected purchases, all made for cash, are $50,000, $70,000, and $80,000 for the months of May through July, respectively • Rent is $3,000 per month • Wages and salaries are 10% of the previous month's sales • Cash dividends of $3,000 will be paid in June • Payment of principal and interest of $4,000 is due in June • A cash purchase of equipment costing $6,000 is scheduled in July • Taxes of $6,000 are due in…
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