Mitchell Company had the following budgeted sales for the last half of last year:

  

	Cash Sales	Credit Sales
July	$30,000	$130,000
August	$35,000	$150,000
September	$41,000	$110,000
October	$46,000	$141,000
November	$56,000	$180,000
December	$60,000	$310,000

  

The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:

  

Collections on credit sales:

50% in month of sales

40% in month of following sales

10.0% in second month following sales

  

Assume that the accounts receivable balance on July 1 was $67,000. Of this amount, $56,000 represented uncollected June sales and $11,000 represented uncollected May sales. Given these data, the total cash collected during July would be:

→	$150,800
	$112,000
	$195,000

Cash collections for July:

June credit sales collected in July ($112,000* × 40%)	$  44,800
May credit sales collected in July	11,000
July cash sales	30,000
July credit sales in July ($130,000 × 50%)	65,000
Total cash collections in July	$150,800

*Accounts receivables representing June credit sales = $56,000 = (40% + 10.0%) × June credit sales

June credit sales = $56,000 ÷ (40% + 10.0%) = $112,000