In: Accounting
Question 4
Fresplanade Co. had the following historical collection pattern
for its credit sales:
75% collected in the month of sale
12% collected in the first month after month of sale
9% collected in the second month after month of sale
3% collected in the third month after month of sale
1% uncollectible
The sales on open account (credit sales) have been budgeted for the
last six months of the year as shown below:
July | $ | 90,000 | |
August | $ | 102,000 | |
September | $ | 114,000 | |
October | $ | 126,000 | |
November | $ | 138,000 | |
December | $ | 120,000 | |
The estimated total cash collections by Fresplanade Co. during November from collection of accounts receivable is:
Multiple Choice
$131,940.
$120,060.
$177,300.
$154,800.
$121,320.
Fresplanade Co. had the following historical collection pattern
for its credit sales:
75% collected in the month of sale
12% collected in the first month after month of sale
8% collected in the second month after month of sale
4% collected in the third month after month of sale
1% uncollectible
The sales on open account (credit sales) have been budgeted for the
last six months of the year as shown below:
July | $ | 87,000 | |
August | $ | 99,000 | |
September | $ | 111,000 | |
October | $ | 123,000 | |
November | $ | 135,000 | |
December | $ | 117,000 | |
The estimated cash collection by Fresplanade Co. during August from July and August credit sales is:
Multiple Choice
$98,850.
$94,380.
$102,090.
$65,250.
$84,690.
November Sales Collection: | |||
November Sales (138000*75%) | 103,500 | ||
October Sales (126000*12%) | 15,120 | ||
September Sales (114000*9%) | 10,260 | ||
August Sales (102000*3%) | 3,060 | ||
Total Collection | 131,940 | ||
Answer is 131940/- | |||
August Sales Collection: | |||
August Sales (99000*75%) | 74,250 | ||
July Sales(87000*12%) | 10,440 | ||
Total Collection | 84,690 | ||
Answer is 84690/- | |||