Cash collections The treasurer of Homeyra Corp. needs to estimate cash collectio
ID: 2454416 • Letter: C
Question
Cash collections
The treasurer of Homeyra Corp. needs to estimate cash collections from accounts receivable for September, October, and November 2014. Forty percent of the company's customers pay in cash and the rest are credit customers. The collection pattern for the credit customers is 20 percent in the month of sale and 80 percent in the following month. Because of Homeyra's established client base, the company experiences almost zero uncollectible accounts. Estimated total sales for August, September, October, and November 2014 follow.
Determine Homeyra Corp.'s cash collections for September, October, and November 2014.
Total collections September $ _____ October $ _____ November $ _____Explanation / Answer
Homeyra Corp Months Aug Sep Oct Nov Sales 78,000 80,000 95,000 91,000 Cash Sales 31,200 32,000 38,000 36,400 Credt sales 46,800 48,000 57,000 54,600 Collection Cash Collections 31,200 32,000 38,000 36,400 Credit sale collection Aug 9,360 37,440 Credit sale collection Sep 9,600 38,400 Credit sale collection Oct 11,400 45,600 Credit sale collection Nov 10,920 Total 40,560 79,040 87,800 92,920 Sep Oct Nov Cash collection from sales 79,040 87,800 92,920
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