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?
A) $64,000
B) $107,000
C) $61,600
D) $121,600

Question

Quizplus · Accepted Answer

The total cash collected in January includes cash sales for January, collections from January's credit sales, and collections from previous accounts receivable. January's cash sales are 20% of $120,000, which is $24,000. Collections from January's credit sales (80% of sales on credit, with 60% collected in the same month) are 0.8 * $120,000 * 0.6 = $57,600. Collections from previous accounts receivable are $40,000. Adding these together, $24,000 + $57,600 + $40,000 = $121,600.

As of January 1 of the Current Year,the Grayson Company