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 $\$ 75,000$ . $\newline$ 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? $\newline$ a) $\$ 25,000$ $\newline$ b) $\$ 75,000$ $\newline$ e) $\$ 62,500$ $\newline$ $4$ ) $\$ 67,250$

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Q. 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

\newline

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?

\newline

\$ 25,000

\newline

\$ 75,000

\newline

\$ 62,500

\newline

4

)

\$ 67,250

Calculate Sales Collection: Calculate the amount collected from next year's first quarter sales. $\newline$ Gianna expects her first 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. $\newline$ So, we calculate $50\%$ of $\$75,000$ . $\newline$ $\$75,000 \times 0.50 = \$37,500$
Add to Accounts Receivable: Add the amount collected from next year's sales to the accounts receivable balance from the end of this year. $\newline$ Gianna has an accounts receivable balance of $\$25,000$ at the end of this year. We add this to the amount collected from next year's sales. $\newline$ $\$37,500$ (from Step $1$ ) + $\$25,000$ = $\$62,500$