O'Neill Co. has $296,000 in accounts receivable on January 1. Budgeted sales for January are $860,000. O'Neill expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the reminder the following month. The January cash collection from sales are?

Well, O'Neill Co. seems to be quite the well-oiled machine. Let's break down the numbers here.

First, we need to find out how much of the sales will be made in cash. So, 20% of $860,000 will be the cash sales. That's $172,000 flying into their pockets.

Now, let's tackle the 80% of sales on account. Of this amount, 75% is expected to be collected in the month of sale. Simple math tells us that would be 0.75 * 0.80 * $860,000, which equals $516,000.

Lastly, we need to figure out the amount that will be collected in the following month. Since this is the remaining 25% of the sales on account, it's easy: 0.25 * 0.80 * $860,000 equals $172,000.

Now, what do we get if we add up the cash sales ($172,000), the expected collections for the month of sale ($516,000), and the collections for the following month ($172,000)? We get $860,000.

So, O'Neill Co. can expect to collect a total of $860,000 in cash from sales in January. Don't spend it all in one place!

Step 1: Calculate the sales on account

Sales on account = Budgeted sales * (1 - Percentage of sales for cash)
Sales on account = $860,000 * (1 - 0.2)
Sales on account = $860,000 * 0.8
Sales on account = $688,000

Step 2: Calculate the collections in the month of sale

Collections in the month of sale = Sales on account * Percentage collected in the month
Collections in the month of sale = $688,000 * 0.75
Collections in the month of sale = $516,000

Step 3: Calculate the collections the following month

Collections the following month = Sales on account * (1 - Percentage collected in the month)
Collections the following month = $688,000 * (1 - 0.75)
Collections the following month = $688,000 * 0.25
Collections the following month = $172,000

Step 4: Calculate the total cash collection for January

Total cash collection for January = Collections in the month of sale + Collections the following month
Total cash collection for January = $516,000 + $172,000
Total cash collection for January = $688,000

Therefore, the January cash collection from sales is $688,000.

To calculate the cash collection from sales for January, we need to consider the different components mentioned in the question.

First, we calculate the amount of sales that will be made on account. This is done by taking 80% of the budgeted sales for January:
80% of $860,000 = $688,000

Next, we calculate the amount that is expected to be collected in the month of sale. According to the given information, 75% of sales on account are expected to be collected in the same month. Therefore, we need to find 75% of $688,000:
75% of $688,000 = $516,000

Now, we calculate the amount that is expected to be collected in the following month. According to the given information, the remaining 25% of sales on account will be collected the following month. Therefore, we need to find 25% of $688,000:
25% of $688,000 = $172,000

To find the total cash collection from sales in January, we add up the amount collected in the month of sale and the amount collected in the following month:
$516,000 + $172,000 = $688,000

Therefore, the January cash collection from sales for O'Neill Co. is $688,000.