Calculator Woodpecker Co. has $309,000 in accounts receivable on January 1. Budgeted sales for January are $839,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are a.$784,160 b.$1,289,200 c.$980,200 d.$588,120

Question

Business

Tyrone Hamilton

5 January, 06:07

Calculator Woodpecker Co. has $309,000 in accounts receivable on January 1. Budgeted sales for January are $839,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are a.$784,160 b.$1,289,200 c.$980,200 d.$588,120

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Morgan · Answer 1

c. $980,200

Explanation:

The computation of the cash collections is shown below:

As January sales is $839,000

So, Cash sales

= $839,000 * 20%

= $167,800

So Credit sales

= $839,000 * 80% * 75%

= $503,400

And on January 1, the account receivable is $309,000

So, the January cash collections from sales is

= $167,800 + $503,400 + $309,000

= $980,200