Cash Collections E8A. Five Bros., Inc., is an automobile maintenance and repair
ID: 2409194 • Letter: C
Question
Cash Collections E8A. Five Bros., Inc., is an automobile maintenance and repair company with outlets throughout the western United States. The company controller is starting to assemble the cash budget for the fourth quarter. Projected sales for the quarter follow On Account $400,000 690,000 750,000 Cash $190 October November December ,000 220,000 245,000 Cash collection records pertaining to sales on account indicate the following collec- tion pattern: Month of sale First month following sale Second month following sale Uncollectible 4096 30% 28% 2% Sales on account during August were $346,000. During September, sales on account were $390,000. Comp ute the amount of cash to be collected from customers during each month of the fourth quarterExplanation / Answer
Schedule of expected cash collections from customers during fourth quarter October November December Total Cash collection from August sales 96,880 - - 96,880 (346000*28%) Cash collection from September sales 1,17,000 1,09,200 - 2,26,200 (390000*30%) (390000*28%) Cash collection from October sales 1,60,000 1,20,000 1,12,000 3,92,000 (400000*40%) (400000*30%) (400000*28%) Cash collection from November sales - 2,76,000 2,07,000 4,83,000 (690000*40%) (690000*30%) Cash collection from December sales - - 3,00,000 3,00,000 (750000*40%) Total Cash collections from on account customers 3,73,880 5,05,200 6,19,000 14,98,080 Cash sales 1,90,000 2,20,000 2,45,000 6,55,000 Total Cash collections from customers 5,63,880 7,25,200 8,64,000 21,53,080