1 answer

A company is formulating its plans for the coming year, including the preparation of its cash...

Question:

A company is formulating its plans for the coming year, including the preparation of its cash budget. Historically, the compa
A company is formulating its plans for the coming year, including the preparation of its cash budget. Historically, the company's sales are 30% cash. The remaining sales are on credit with the following collection pattern: Collections on Account In the month of sale In the month following the sale Uncollectible Percentage 40% 58% 2% Sales for the first 5 months of the coming year are forecast as follows: January February March April May $3,860,000 4,160,000 3,960,000 4,360,000 4,560,000 For the month of April, the total cash receipts from sales and collections on accounts would be: (CIA adapted) Multiple Choice < Prev 15 of 34 Next >

Answers

January February March April
Total sales 3860000 4160000 3960000 4360000
Cash sales $ 11,58,000 $     12,48,000 $     11,88,000 $      13,08,000
Sales on account $ 27,02,000 $     29,12,000 $     27,72,000 $      30,52,000
January February March April
Receipts from Cash Sales $ 11,58,000 $     12,48,000 $     11,88,000 $      13,08,000
Add: Receipts from sales on account
In the month of sale $ 10,80,800 $     11,64,800 $     11,08,800 $      12,20,800
In the following month of sale $     15,67,160 $     16,88,960 $      16,07,760
Total cash receipts collected $ 22,38,800 $     39,79,960 $     39,85,760 $      41,36,560
Total cash receipts collected in the month of April = $      41,36,560
Collections on account = ($3052000 X 58%) $      17,70,160
.

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