Question 1

As of January 1 of the current year, the Grayson Company had accounts receivables of $40,000. The sales for January, February, and March were as follows: $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales) , 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales)  in the month of January?

Accepted Answer

A)   $64,000
B)   $107,000
C)   $61,600
D)   $121,600E) B) and C)
F) A) and D)

Question 2

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business-September, October, and November-are $260,000, $375,000, and $400,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale.
The cash collections expected in October from accounts receivable are estimated to be

Accepted Answer

A)   $246,400
B)   $262,500
C)   $210,000
D)   $294,500E) A) and B)
F) A) and C)

Exam 7: Budgeting

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Exam 7: Budgeting

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