Question

In: Accounting

Enterprises reported the following cash collections in July and August from credit sales: July August From...

Enterprises reported the following cash collections in July and August from credit sales:

July August
From June receivables $ 39,000
From July sales 126,000 $ 54,000
From August sales 168,000

The company sells a single product for $20, and all sales are collected over a two-month period.

Required:

  1. Determine the number of units that were sold in July.
  2. Determine the percent of credit sales collected in the month of sale and the percent of sales collected in the month following sale.
  3. How many units were sold in August?
  4. Determine the accounts receivable balance as of August 31.

Solutions

Expert Solution

Answer A:

9,000 units

Explanation:

Total sales in July = $126,000 + $ 54,000 = $ 180,000

Selling price per unit = $ 20

Units sold in July = $ 180 000 / $ 20

= 9,000 units

Answer B:

The percent of credit sales collected in the month of sale = 70%

The percent of sales collected in the month following sale = 30%

Explanation:

In July, $ 126,000 is collected in July itself, and $ 54,000 is collected in August.

So, collections in July = $ 126,000 / $ 180,000 * 100

= 70%.

Collections in August = $ 54,000 / $ 180,000 * 100

= 30%

Answer C:

12,000 units

Explanation:

August sales collected in same month = $ 168,000

Total sales of August = $ 168,000 / 70 * 100

= $ 240,000

Sale units in August = $ 240,000 / $ 20

= 12,000 units

Answer D:

$ 72,000

Explanation:

Total sales in August = $ 240,000.

The percent of sales collected in the month following sale = 30%

Account receivable on August 31 = $ 240,000 * 30%

= $ 72,000

In case of any doubt, please comment.


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