Question
Mitchell Company had the following budgeted sales for the first half of next year: Cash Sales Credit Sales January $90,000 $190,000 February $95,000 $210,000 March
Mitchell Company had the following budgeted sales for the first half of next year:
| Cash Sales | Credit Sales | |
| January | $90,000 | $190,000 |
| February | $95,000 | $210,000 |
| March | $35,000 | $170,000 |
| April | $40,000 | $135,000 |
| May | $50,000 | $240,000 |
| June | $120,000 | $250,000 |
| 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: |
| 50% in month of sales |
| 40% in month of following sales |
| 10.0% in second month following sales |
| Assume that the accounts receivable balance on January 1 was $65,000. Of this amount, $50,000 represented uncollected December sales and $15,000 represented uncollected November sales. Given these data, the total cash collected during January would be: |
a. $325,000
b. $255,000
c. $240,000
d. $100,000
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