Question

Answer the following questions using the information below:

The following information pertains to the January operating budget for Casey Corporation.

∙ Budgeted sales for January $200, 000 and February $100,000.
∙ Collections for sales are 60% in the month of sale and 40% the next month.
∙ Gross margin is 30% of sales.
∙ Administrative costs are $10,000 each month.
∙ Beginning accounts receivable is $20,000.
∙ Beginning inventory is $14,000.
∙ Beginning accounts payable is $65,000. (All from inventory purchases.)
∙ Purchases are paid in full the following month.
∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS).

*15) For January, budgeted cash collections are ________.*
A) $200,000
B) $140,000
C) $120,000
D) $20,000
Objective 6.A

Answer 1

To calculate the January budgeted cash collections for Casey Corporation, we sum 60% of January sales ($120,000) and the beginning accounts receivable ($20,000), resulting in a total of $140,000. The correct option is B.

Step-by-step explanation:

The question pertains to the calculation of budgeted cash collections for Casey Corporation for the month of January. To determine this, we need to consider the collection pattern for sales as stated in the information provided: 60% of sales are collected in the month of sale, and 40% in the following month.

For January, the budgeted sales are $200,000. Therefore, the cash collections for January include 60% of January sales and the beginning accounts receivable. To calculate the January cash collections:

• January sales collected in January = 60% of $200,000 = $120,000
• Collections from prior months (December, in this case) = $20,000 (beginning accounts receivable)
• Total budgeted cash collections for January = $120,000 (January sales) + $20,000 (prior collections) = $140,000. . The correct option is B.