Question

​(Pro

forma accounts receivable balance

calculation​)

​Jimmie's micro brewery is located in downtown​ Ruston, Louisiana in a restored section of the old Ford dealership. Jimmie sells his beer both to retail customers that visit his brewery and also distributes his line of craft beers through M. L. Keith Food Distributors.​ Jimmie's wholesale distributor purchases his beer on credit which amounts to about​ 50% of the​ brewery's total sales. Firm sales were roughly evenly split between credit and cash​ sales, with 25 percent of the credit sales collected in the month after the sale and the remainder 2 months after the sale. Historical and projected sales for the brewing company are given​ here:

MONTH	SALES	MONTH	SALES
January	​$64,000	March	​$74,000
February	​$69,000	April​ (projected)	​$63,000

.

a. Under these​ circumstances, what should the balance in accounts receivable be at the end of​ April?

b. How much cash did​ Jimmie's realize during April from sales and​ collections?

a. Under these​ circumstances, what should the balance in accounts receivable be at the end of​ April?

​

Answer 1

Answer: a :The balance in accounts receivable be at the end of April is $ 85125

Particulars	Jan	Feb	Mar	April
Sales	64,000	69,000	74,000	63,000
Cash Sales	32,000	34,500	37,000	31,500
	($64000*50%)	($69000*50%)	($74000*50%)	($63000*50%)
Credit Sales	32,000	34,500	37,000	31,500
	($64000*50%)	($69000*50%)	($74000*50%)	($63000*50%)
Beginning A/R Balance (A)	-	32,000	58,500	86,875
Add: Sales (B)	32,000	34,500	37,000	31,500
Less: Credit Sale Collection
Jan Sales Collection		8,000		24,000
		($32000*25%)		($32000*75%)
Feb Sales Collection			8,625
			($34500*25%)
March Sales Collection				9,250
				$37000*25%)
Total Collection ( C)	32,000	8,000	8,625	33,250
Ending A/R balance (A)+(B)+(C)	32,000	58,500	86,875	85,125
The balance in accounts receivable be at the end of April is $ 85125

b.

Cash Sales	31,500
Add: Credit Sales Collection	33,250
Total Cash Collection in April	64,750
Jimmie's realizes $ 64,750 Cash During April from Sales & Collection