Budgeting Cash Receipts: Cash Discounts Allowed on Receivables Yeopay Plumbing Supply accepts bank charge cards and offers established plumbers charge accounts with terms of 1/eom, n/45. Yeopay’s experience is that 25 percent of its sales are for cash and bank credit cards. The remaining 75 percent are on credit. Of the cash sales, 40 percent pay cash and the remaining 60 percent pay with bank credit cards. Yeopay receives payments from the bank on credit card sales at the end of the day. However, Yeopay has to pay 3 percent for these services. An aging schedule for accounts receivable shows the following pattern on credit sales:
20 | percent pay in the month of sale |
50 | percent pay in the first month following the sale. |
15 | percent pay in the second month following the sale. |
12 | percent pay in the third month following the sale. |
3 | percent are never collected. |
All accounts not paid by the end of the second month following the month of sale are considered overdue and are subject to 2 percent monthly late charge. Yeopay has prepared the following sales forecasts:
June | $60,000 |
July | 80,000 |
August | 90,000 |
September | 96,000 |
October | 88,000 |
Required
1. Prepare a schedule of cash receipts for September.
2. What is the appropriate accounting treatment for the bank service fees and the cash discounts allowed on collection of receivables?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.