Question

70 percent collected in the month of sale. 15 percent collected in the first month after sale. 10 percent collected in the second month after sale. 4 percent collected in the third month after sale. 1 percent uncollectible. The sales on account have been budgeted for the last seven months as follows: $130,500 June July August September 158,000 183,000 216,000 241,000 266,000 228,500 October November December Required: 1. Compute the estimated total cash collections during October from credit sales. 2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.

Answer 1

1 2 Total Cash Collections Total Cash Collections $ $ 225,720 615,000 1) Total Cash collections during October from Credit Sales From July Sales $ 158000 * 4% From August Sales $ 183000 * 10% From September Sales $ 216000 * 15% From October Sales $241000 * 70% Total Cash collected during October Cash collected in October 6,320 $ 18,300 $ 32,400 $ 168,700 $ 225,720 2) Total Cash collections during the foruth quarter from the sales made on account during the forth quarter October November December 4th Quarter From October Sales $ 168,700 $ 36,150 $ 24,100 $ 228,950 ($ 241000*70%) ($ 241000*15%) ($ 241000*10%) From November Sales $ - $ 186,200 $ 39,900 $ 226,100 ($ 266000 * 70%) ($ 266000 *15%) From December Sales 159,950 $ 159,950 ($ 228500 * 70%) Total 168,700$ 222,350 $ 223,950 $ 615,000