Answer (A) is correct . Since collections are 60% of the current month’s sales and 38% of the previous month’s sales, total collections should be Accounts receivable $??76,000 December sales of $220,000 × 60% 132,000 Budgeted cash collections $208,000
Answer (B) is incorrect because The amount of $132,000 does not include accounts receivable.
Answer (C) is incorrect because The budgeted cash collections for January Year 2 equals $203,600.
Answer (D) is incorrect because The amount of $212,000 includes the $4,000 allowance for uncollectible accounts.
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Kelly’s budgeted cash collections for December Year 1 are