Gianna runs a small business and is attempting to create a Cash Collections Budget, so she can determine her income for the first quarter of next year. She has an accounte receivable balance of $25,000 at the end of this year and expects her 1 st quarter sales for next year to be $75,000. If her standard is to collect 50% of sales in the quarter in which it was earned, how much will her Total Cash Collections be for Quarter 1 of next year? a.) $25,000 b.) $75,000 a) $62,500 d.) $67,250

Question

Gianna runs a small business and is attempting to create a Cash Collections Budget, so she can determine her income for the first quarter of next year. She has an accounte receivable balance of  $25,000 at the end of this year and expects her 1 st quarter sales for next year to be  $75,000. If her standard is to collect  50% of sales in the quarter in which it was earned, how much will her Total Cash Collections be for Quarter 1 of next year? a.)  $25,000 b.)  $75,000 a)  $62,500 d.)  $67,250

Bytelearn · Accepted Answer

Account Receivable Balance: Gianna's account receivable balance at the end of this year is $25,000. This amount is expected to be collected in the first quarter of next year.1st Quarter Sales: Gianna expects her 1st quarter sales for next year to be $75,000. According to her standard, she will collect 50% of these sales in the quarter in which it was earned.Calculation of Collection: To find out how much she will collect from the sales of the first quarter, we calculate 50% of $75,000. $75,000 * 50% = $75,000 * 0.5 = $37,500Total Collection: Now, we add the amount collected from the first quarter sales to the account receivable balance that will be collected. $25,000 (account receivable balance) + $37,500 (50% of first quarter sales) = $62,500

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