\\ E) Ch. 23 Homework-ACC × / Connect tps://newconnect.mheducation.com/flow/conn

Question

E) Ch. 23 Homework-ACC × / Connect tps://newconnect.mheducation.com/flow/connect.html work Sales on account for the first two months of the current year are budgeted as follows. January February $888,688 821,688 All sales are made on terms of 2/10, n/30 (2 percent discount if paid in 10 days, full amount by 3 receivable are typically made as follows. Collections within the month of sale: Within discount period After discount period 60% 15 Collections within the month following sale: 15 Within discount period After discount period Returns, allowances, and uncollectibles Total 100x ompute the estimated cash collections on accounts receivable for the month of February

Explanation / Answer

Solution: Estimated cash collections for February $   798,594 Working Notes: Estimated cash collections for February is cash collection from current month February sales within February and balance collection from sales of January. Sales on account 821,000 February Collection Within month of sale [February ] Within discount period 60%                            482,748 [will reduced by discount of 2%] [821,000 x 60% x 0.98] After discount period   15%                            123,150 [NO DISCOUNT] [821,000 x 15% ] Collections within the month following sale: (January's sales will be collected in February) Within discount period 15%                            130,536 [will reduced by discount of 2%] [888,000 x 15% x 0.98] After discount period   7%                               62,160 [NO DISCOUNT] [888,000 x 7%] Estimated cash collections for February $                            798,594 [482,748 + 123,150+130,536+62,160] Please feel free to ask if anything about above solution in comment section of the question.

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