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27 June, 02:08

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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  1. 27 June, 02:13
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    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
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