ben is a retiler of assorted baby products. the sales forecast for the coming mo

Question

ben is a retiler of assorted baby products. the sales forecast for the coming months is april $175000 may $200000 june $225000 july $240000 august $230000 all sales are credit sales. the cash collection patern is20% in the month of sale, 70% in the month following the sale, and the remainder in the second month following the sale. accounts receivable on june 1 were $177500. a) prepare a cash receipt schedule for the period june through august. b) what will be the accounts receivable balance on august 31?

Explanation / Answer

a. Schedule of cash receipts :

b. Accounts Receivable:

July : $ 240,000 x 10% = $ 24,000.

August : $ 230,000 x 80% = $ 184,000

Total Accounts Receivable on August 31 = $ 24,000 + $ 184,000 = $ 208,000.

June July August Collection of Sales of April 17,500 0 0 May 140,000 20,000 0 June 45,000 157,500 22,500 July 0 48,000 168,000 August 0 0 46,000 Total Collections $ 202,500 $ 225,500 $ 236,500

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