The following is the sales budget for Harp. Inc., for the first quarter of 2015:

Question

The following is the sales budget for Harp. Inc., for the first quarter of 2015: Credit sales are collected as follows: 60 percent in the month of the sale 30 percent in the month after the sale 10 percent in the second month after the sale The accounts receivable balance at the end of the previous quarter was $83,000 ($53,000 of which was uncollected December sales). Calculate the sales for November. Calculate the sales for December. Calculate the cash collections from sales for each month from January through March.

Explanation / Answer

a)November receivable at end of previous quarter = 83,000 - 53,000

                                                                                            = $ 30,000

collected amount of november sales = 60% nov + 30% in dec = 90%

November sales =receivable due /(1- collected amount)

                                =   30,000 / (1 - .90)

                                 = 30000 / .10

                                 = $ 300,000

b)December sales = receivable due = $ 53,000

collected amount = 60% in dec.

December sales= 53000 / (1-.60)

                                = 53000 / .40

                                = $ 132,500

c)

Jan Feb Mar Novs ales 30000 dec sales 39750    [132500*.30] 13250     [132500*.10] jan sales 119400   [199000*.60] 59700    [199000*.30] 19900   [199000*.10] feb sales 131400    [219000*.60] 65700   [219000*.30] mar 145200 [242000*.60] Total collection 189150 204350 230800

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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