Mitchell Company had the following budgeted sales for the last half of last year
ID: 2486172 • Letter: M
Question
Mitchell Company had the following budgeted sales for the last half of last year: Cash Sales Credit Sales July $90,000 $190,000 August $95,000 $210,000 September $52,000 $170,000 October $57,000 $152,000 November $67,000 $240,000 December $120,000 $420,000 The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: Collections on credit sales: 50% in month of sales 25% in month of following sales 25% in second month following sales What is the budgeted accounts receivable balance on December 1?
Explanation / Answer
Therefore opening acc receivable on december 1 would be closing balance of november 30 hence it is 158000
July Aug Sep Oct Nov Dec Cash sales 90000 95000 52000 57000 67000 120000 Credit sales 190000 210000 170000 152000 240000 420000 Collection from credit sales 50% this month 95000 105000 85000 76000 120000 210000 Collection from credit sales 25% next month 47500 52500 42500 38000 60000 Collection from credit sales 25% next to next month 47500 52500 42500 38000 Total collection cash from credit collection 185000 247500 237000 228000 267500 428000 Account receivable closing 95000 152500 137500 118500 158000 270000