Midwest Products is a wholesale
distributor of leaf rakes. Thus, peak sales occur in August of each year as
shown in the company’s sales budget for the third quarter, given below:
|
July
|
August
|
September
|
Total
|
|
Budgeted sales (all on
account)
|
$
600,000
|
$
900,000
|
$
500,000
|
$
2,000,000
|
From
past experience, the company has learned that 20% of a month’s sales are
collected in the month of sale, another 70% are collected in the month
following sale, and the remaining 10% are collected in the second month
following sale. Bad debts are negligible and can be ignored. May sales
totaled $430,000, and June sales totaled $540,000.
|
|
Required:
|
|
1.
|
Prepare
a schedule of expected cash collections from sales, by month and in total,
for the third quarter. (Do not round intermediate
calculations. Leave no cells blank - be certain to enter "0"
wherever required. Omit the "$" sign in your response.)
|
Schedule
of Expected Cash Collections
|
||||
July
|
August
|
September
|
Total
|
|
May sales
|
$
43,000
![]() |
$
0
![]() |
$
0
![]() |
$
43,000
![]() |
June sales
|
378,000
![]() |
54,000
![]() |
0
![]() |
432,000
![]() |
July sales
|
120,000
![]() |
420,000
![]() |
60,000
![]() |
600,000
![]() |
August sales
|
0
![]() |
180,000
![]() |
630,000
![]() |
810,000
![]() |
September sales
|
0
![]() |
0
![]() |
100,000
![]() |
100,000
![]() |
Total cash collections
|
$
541,000
![]() |
$
654,000
![]() |
$
790,000
![]() |
$
1,985,000
![]() |
2.
|
Assume
that the company will prepare a budgeted balance sheet as of September 30.
Compute the accounts receivable as of that date.
(Do not round intermediate calculations. Omit the "$" sign in your
response.)
|
Total accounts
receivable
|
$
n/r
![]() |
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