Duluth Company is preparing its cash budget for December. The following informat
ID: 2388937 • Letter: D
Question
Duluth Company is preparing its cash budget for December. The following information is available concerning its accounts receivable:Estimated credit sales for December $ 300,000
Actual credit sales for November $ 225,000
Estimated collections in December for credit sales in December 25 %
Estimated collections in December for credit sales in November 70 %
Estimated collections in December for credit sales prior to November $ 24,000
Estimated write-offs in December for uncollectible credit sales $ 12,000
Estimated provision for bad debts in December for credit sales in December $ 10,500
Required:
What is the estimated amount of cash receipts from accounts receivable collections in December?
Explanation / Answer
300,000*25%=75000 225,000*70%=157500 + 24000 -12000 =$244500 (December bad debt are usually not included in estimation) -10500 = 234000 (If December credit sales bad debt is included)