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 accounts receivable balance of $25,000 at the end of this year and expects her ist 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 accounts receivable balance of  $25,000 at the end of this year and expects her ist 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

Calculate Sales Collection: Calculate the amount collected from next year's first quarter sales. Gianna expects to collect 50% of her first quarter sales. First, convert 50% to a decimal. 50% = 50/100 = 0.5Multiply Sales and Percentage: Multiply the first quarter sales by the percentage she expects to collect. $75,000 (first quarter sales) * 0.5 (percentage collected) = $37,500 collected from first quarter sales.Add to Accounts Receivable: Add the amount collected from next year's first quarter sales to the accounts receivable balance from the end of this year. Gianna has an accounts receivable balance of $25,000. $25,000 (accounts receivable) + $37,500 (collected from first quarter sales) = $62,500 total cash collections for Quarter 1 of next year.

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