. Schedule of cash collections Sugarland Company sells a single product and anti
ID: 2360977 • Letter: #
Question
. Schedule of cash collections Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the current year. Expected sales during the first three months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on account. Credit sales have the following collection pattern: Collected in the month of sale 60% Collected in the month following sale 35 Uncollectible 5 a. Prepare a schedule of cash collections for May through July. b. Compute the expected balance in Accounts Receivable as of July 31.Explanation / Answer
as of may 60% is collected : 0.60 * 60000 =36000$
in june 60% of june and 35% of may is collected = 0.6 * 80000 + 0.35 * 60000=48000+21000
=69000
in july 60%of july and 35% of june is collected = 0.6*85000 + 0.35 * 80000 = 79000$
total receivables = 60000+80000+85000=225000$
but received money = 36000+69000+79000 = 184000$
amount receivables as of july 31 = 225000-184000 = $ 41000
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