The lagrange corporation had the following budgeted sales for the first half of the current year: cash sales credit sales january $ 30,000 $ 130,000 february $ 35,000 $ 150,000 march $ 36,000 $ 110,000 april $ 31,000 $ 116,000 may $ 41,000 $ 180,000 june $ 60,000 $ 100,000 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 sales: 50% in month of sale 40% in month following sale 10% in second month following sale the accounts receivable balance on january 1 of the current year was $72,000, of which $56,000 represents uncollected december sales and $16,000 represents uncollected november sales. the total cash collected during january by lagrange corporation would be:

The total cash collected during January by LaGrange Corporation would be $119,000.

A cash budget is a financial planning tool that helps financial managers to better understand the timing of the organization's cash flows. It also helps the managers to monitor whether the current cash flows can fund all companies' operations within the period to make any changes in their cash projections.

Accounts receivable on January 1 = $72,000

Uncollected December sales = $56,000

Uncollected November sales = $16,000

Cash Sales = $30,000

Credit Sales = $130,000

Cash collections in January = $30,000

Credit Sales in January =        $65,000 ($130,000 x 50%)

Credit Sales in December =    $22,400 ($56,000 x 40%)

Credit Sales in November =       $1,600 ($16,000 x 10%)

Total cash collections =        $119,000

Thus, the total cash collected during January by LaGrange Corporation would be $119,000.

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The total cash collected during January by Lagrange Corporation would be $155,800.

Explanation:

Total cash collection represent the sum of cash sales and credit sales

The total cash collection during January is shown below:

1. Cash sales -  $ 30,000

2. Based on the criteria of collection, the computation is given below:

Credit sales

50%  in month of sale i.e January = $ 130,000 × 50% = $65,000

40% in month following sale i.e December = ($56,000 × 40 ) ÷ 50 = $44800

10% in second month following sale i.e. November  = $16,000

Since, The December and November sales is not given, so we considered accounts receivable balance of December and November

For December sale = $56,000 is given in the question but 40% is considered so multiply by 40% and in January 50% is collection ,so for December we divide by 50% as it denotes remaining percentage

And for November, it is given in the question i.e. $16,000

Thus, the total sales = cash sales + credit sales of all three months

                                  =  $ 30,000 + $65,000 + $44800 + $16,000

                                  = $155,800

Hence, The total cash collected during January by Lagrange Corporation would be $155,800.

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