5. Copper Incorporated had the following projected sales for the next three mont

Question

5. Copper Incorporated had the following projected sales for the next three months are as follows: April May June $250,000 200,000 275,000 The company expects to sell 20% of its merchandise for cash. Of the 80% of the sales sold on expected to be collected in the month of the sale and the remainder in the month following the sale. Accounts receivables on April 1 was $70,000. account, 30% are Calculate the following a. Estimated cash collections in April. b. Estimated cash collections in May. c. Estimated cash collections in June d. Estimated accounts receivable balance for April 30th, e. Estimated accounts receivable balance for May 31t f. Estimated accounts receivable balance for June 30

Explanation / Answer

a) Estimated collection in april = (250000*20%+250000*80%*30%+70000) = 180000

b) Estimated collection in may = (250000*80%*70%+200000*20%+200000*80%*30%) = 228000

c) Estimated collection in june = (200000*80%*70%+275000*20%+275000*80%*30%) = 233000

d) Account receivable balance on april 30 = 250000*80%*70% = 140000

e) Account receivable balance on may 31 = 200000*80%*70% = 112000

f) Account receivable balance on june 30 = 275000*80%*70% = 154000

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