In: Accounting
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:
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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