The following credit sales are budgeted by Sheridan Electronics: January $123600 February 120000 March 135600 April...

The following credit sales are budgeted by Sheridan Electronics:

January	$123600
February	120000
March	135600
April	141000
May	141300

The company's past experience indicates that 50% of the accounts receivable are collected in the month of sale, 30% in the month following the sale, and 19% in the second month following the sale. 1 percent are uncollectible. How much does the company anticipate as cash receipts for March?

$134244

$127284

$136947

$123564

Solutions

Expert Solution

Solution : The anticipated cash receipts for the month of March is $127,284,

Based on the given information,

a) 50% of the credit sale are collected in the month of sale.

b) 30% of the credit sale are collected in the month following the sale.

c) 19% of the credit sale are collected in the second month following the sale.

Therefore, the anticipated cash collection can be calculated with the help of the below table

All the figures are in $	Month
	Jan	Feb	Mar	Apr	May
Credit Sales	123,600.00	120,000.00	135,600.00	141,000.00	141,300.00
Cash Collection in March
50% of current sales (i.e. March)			67,800.00
30% of previous month sale (i.e. February)			36,000.00
19% of sale done 2 months before (i.e. January)			23,484.00

Total Cash Receipts (anticipated)			127,284.00

ekkarill92 answered 1 year ago

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