Oakton Furniture provided the following information relevant to its sales for December Year 1 and the first quarter of Year 2:
Dec. Year 1 Jan. Year 2 Feb. Year 2 Mar. Year 2
(Actual) (Budgeted) (Budgeted) (Budgeted)
Credit sales $ 59,000 $ 139,000 $ 154,000 $ 109,000 Cash sales $ 10,000 $ 24,000 $ 29,000 $ 11,000 Based on the company's collection history, 43% of credit sales are collected in month of sale and the remainder is collected in the following month.
Cash collections in January from December credit sales would be:
Multiple Choice
$40,000.
$37,930.
$35,400.
$33,630.

Accounts receivable performs the function of cash collection. It involves getting money back from a company or person to whom you have sent an invoice. Invoices that have not been paid are deemed unpaid. Terms of payment are always included on invoices.

Cash collection is a treasury function that refers to the procedure by which a business obtains money from other companies (or individuals) to whom it has previously sent an invoice. It is also referred to as payment collection. The primary goal of cash collection is to ensure that invoices are paid by the due date.

The cash collection will be:

Credit sales $59000

43% collected in December = $25370

57% collected in January = $33630

Therefore, it should be noted that the correct option is D.

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