On March 31, 2013, Mike\'s Bike Shop had and outstanding accounts receivable of
ID: 2653563 • Letter: O
Question
On March 31, 2013, Mike's Bike Shop had and outstanding accounts receivable of $19,000. Mike's sales are roughlt evenly split between credit and cash sales, with the credit sales collected half in the month after the sale and the remainder 2 months after the sale. Historical and projected sales for the bike shop are given here:
Month Sales
January $17,000
February $22,000
March $27,000
April(projected) $33,000
a. Under these circumstances, what should the balance in accounts receivable be at the end of April?
b. How much cash did Mike's realize during April from sales and collections?
Explanation / Answer
a. Balance in accounts receivable at the end of April would be $ 23250.
Working Note :
Amount being marked Bold below are yet to be collected till April.
Collection Details
Month
January
February
March
April
May
June
January
0
4250
4250
February
0
0
5500
5500
March
0
0
0
6750
6750
April
0
0
0
0
8250
8250
b, Cash Sales = 16500 (please refer below table)
Credit Sales = 12250 (please refer above table)
Total Cash Realization in April from Sales & Collections = 16500 + 12250 = 28750
Working Note :
Month
January
February
March
April
May
June
January
0
4250
4250
February
0
0
5500
5500
March
0
0
0
6750
6750
April
0
0
0
0
8250
8250
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