Question

Jackson's Auto Parts projects the following sales:

April May June $ 225,000 $ 253,000 $ 178,000

76 percent of Ellis' sales are on credit with 68 percent of receivables collected in the month after the sale and the rest of receivables collected in the second month after the sale. February sales were $237,000 and March sales were $251,000. In the past Ellis' bad debt percentage has been 0 and is expected to continue.

a) Cash Receipts for April

b) Cash Receipts for May

c) Cash Receipts for June

d) Accounts receivable at June 30

Answer 1

a) The correct answer is $ 241,355.20

b) The correct answer is $ 238,043.20

c) The correct answer is $ 228,190.40

d) The correct answer is $ 196,809.60

Note :

For a) , b) and c)

Schedule of  cash receipts
	February	March	April	May	June
Sales	2,37,000.00	2,51,000.00	2,25,000.00	2,53,000.00	1,78,000.00
Cash Sales ( 24%)	56,880.00	60,240.00	54,000.00	60,720.00	42,720.00
Credit Sales ( 76%)	1,80,120.00	1,90,760.00	1,71,000.00	1,92,280.00	1,35,280.00
Receipts of Credit Sales:
1. 68% of credit Sales in following Month	-	1,22,481.60	1,29,716.80	1,16,280.00	1,30,750.40
3. 32% of credit Sales in 2 Months following Month of Sales	-	-	57,638.40	61,043.20	54,720.00
Cash Receipts From Credit Sales		1,22,481.60	1,87,355.20	1,77,323.20	1,85,470.40
Add: Cash Receipts From Cash Sales	56,880.00	60,240.00	54,000.00	60,720.00	42,720.00
Budgeted Cash Receipts	56,880.00	1,82,721.60	2,41,355.20	2,38,043.20	2,28,190.40

For d)

Accounts receivable at June 30 = 32% * Credit Sales of May + 76 % of Total Sales of June

= $ 192,280 * 32% + 178,000 * 76%

= $ 196,809.60