Fresplanade Co. had the following historical collection pattern for its credit sales: 70% collected in the...

Fresplanade Co. had the following historical collection pattern for its credit sales:

70% collected in the month of sale
14% collected in the first month after month of sale
8% collected in the second month after month of sale
6% collected in the third month after month of sale
2% uncollectible

The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below:


July	$	84,000
August	$	96,000
September	$	108,000
October	$	120,000
November	$	132,000
December	$	114,000

The estimated cash collection by Fresplanade Co. during August from July and August credit sales is:

Expert Solution

Cash collection by Fresplanade Co. during August from July and August credit sales is = $78960

Working:

Expected cash collection budget
	July	August
Sales	$ 84,000.00	$ 96,000.00
Schedule of expected cash collection

July sales	$ 58,800.00 (84000*70%)	$ 11,760.00 (84000*14%)
August sales		$ 67,200.00 (96000*70%)
Total cash collection	$ 58,800.00	$ 78,960.00

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ekkarill92 answered 3 years ago

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