From past experience, the company has learned that 20% of a month’s sales are co

Question

From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 75% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can be ignored. May sales totaled $434,000, and June sales totaled $510,000.

Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter

Assume that the company will prepare a budgeted balance sheet as of September 30. Compute the accounts receivable as of that date.

Midwest Products is a wholesale distributor of leaf rakes. Thus, peak sales occur in August of each year as shown in the company’s sales budget for the third quarter, given below:

Explanation / Answer

Accounts Receivable = 881000*5% + 482000*80% i.e 1266600

Particulars July August September Total Collection from may sale 21700 0 0 21700 Collection from june sale 382500 25500 0 408000 Collection from Current Month sales 117600 176200 96400 390200 75% Coolected in next month 0 441000 660750 1101750 5% collected in second month 0 0 29400 29400 Total Collection 521800 642700 786550 1951050

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.