Question

Papst Company is preparing its cash budget for the month of May. The following information is available concerning its accounts receivable (based on sales made to customers on open account): Actual credit sales for March Actual credit sales for April Estimated credit sales for May Estimated collections in the month of sale Estimated collections in the first month after the month of sale stimated collections in the second month after the month of sale Estimated provision for bad debts (made in the month of sale) $210,000 $272,000 $402,000 25% 60% 10% 5% The firm writes off all uncollectible accounts at the end of the second month after the month of sale. Required: Determine for Papst Company for the month of May: 1. The estimated cash receipts from accounts receivable collections. 2. The gross amount of accounts receivable at the end of the month (after appropriate write-off of uncollectible accounts). 3. The net amount of accounts receivable at the end of the month. 4. Recalculate requirements 1 and 2 under the assumption that estimated collections in the month of sale equal 60% and in the first month following the month of sale equal 25%. 1. Estimated cash receipts 2. Gross accounts receivable 3. Net accounts receivable 4a. Estimated cash receipts 4b. Gross accounts receivable

Answer 1

Please give positive ratings so I can keep answering. Thanks!

Papst
Answer 1
Estimated Cash Receipts	March	April	May
Credit sale	210,000.00	272,000.00	402,000.00
25% collected in the same month	52,500.00	68,000.00	100,500.00
60% collected in the next month		126,000.00	163,200.00
10% collected in the second month			21,000.00
Estimated Cash Receipts			284,700.00
Answer 2
Estimated provision for bad debts	March	April	May
Credit sale	210,000.00	272,000.00	402,000.00
5% of credit sale	10,500.00	13,600.00	20,100.00
Estimated provision for bad debts	10,500.00	13,600.00	20,100.00
Gross receivable for May will be	March	April	May
Opening Balance	-	157,500.00	235,500.00
Credit sale	210,000.00	272,000.00	402,000.00
Less: 25% collected in the same month	52,500.00	68,000.00
Less: 60% collected in the next month		126,000.00
Less: 10% collected in the second month
Less: Bad debts of March written off			10,500.00
Closing Balance	157,500.00	235,500.00	627,000.00
So Gross receivable for May is $ 627,000.
Answer 3
Net receivable for May will be			May
Gross receivable for May			627,000.00
Less: 25% collected in the same month			100,500.00
Less: 60% of credit sales of April			163,200.00
Less: 10% of credit sales of March			21,000.00
Net receivable for May			342,300.00
Answer 4a
Estimated Cash Receipts	March	April	May
Credit sale	210,000.00	272,000.00	402,000.00
60% collected in the same month	126,000.00	163,200.00	241,200.00
25% collected in the next month		52,500.00	68,000.00
10% collected in the second month			21,000.00
Estimated Cash Receipts			330,200.00
Answer 4b
Gross receivable for May will be	March	April	May
Opening Balance	-	84,000.00	140,300.00
Credit sale	210,000.00	272,000.00	402,000.00
Less: 60% collected in the same month	126,000.00	163,200.00
Less: 25% collected in the next month		52,500.00
Less: 10% collected in the second month
Less: Bad debts of March written off			10,500.00
Closing Balance	84,000.00	140,300.00	531,800.00
So Gross receivable for May is $ 531,800.