Inc., a distributor of salsa, has the following historical collection pattern fo
ID: 2519668 • Letter: I
Question
Inc., a distributor of salsa, has the following historical collection pattern for its credit sales. Cash Collections Exercise 9-24 70 percent collected in the month of sale. 15 percent collected in the first month after sale. (LO 9-3, 9-5) 10 percent collected in the second month after sale. 4 percent collected in the third month after sale, 1 percent uncollectible. n account have been budgeted for the last seven months as follows: The sales o June July August... September.. October ovember. December 49,000 60,000 70,000 80,000 90,000 100,000 85,000 Required Compute the estimated total cash collections during October from credit sales. 1. 2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter. Build a spreadsheet: Construct an Excel spreadsheet to solve both of the preceding requiremen Show how the solution will change if the following information changes: sales in June and July were $50,000 and $65,000, respectively. 3.Explanation / Answer
Answer =1 CASH COLLECTION - SCHEDULES June July August September October November December Budgeted Sales $ 49,000 $ 60,000 $ 70,000 $ 80,000 $ 90,000 $ 1,00,000 $ 85,000 Cash Collected in the month of Sale 70 % $ 34,300 $ 42,000 $ 49,000 $ 56,000 $ 63,000 $ 70,000 $ 59,500 15 % collected is the month after sale $ 7,350 $ 9,000 $ 10,500 $ 12,000 $ 13,500 $ 15,000 10% collected in the second month after sale $ 4,900 $ 6,000 $ 7,000 $ 8,000 $ 9,000 4% collected in the Third month after sale $ 1,960 $ 2,400 $ 2,800 $ 3,200 1% is uncollectable $ - $ - $ - Total Collection of the months $ 74,460 $ 84,400 $ 94,300 $ 86,700 Answer =1) Total Cash Collection during the month of October from Credit Sales = $ 84,400 Answer = 2) Sales 70% in the month sales 15% collected in the next month 10% collected in the secon month of Sales Total Collection of the quarter Collection from the sale made on October $ 90,000 $ 63,000 $ 63,000 Collection from the sale made on November 100000 $ 70,000 $ 13,500 $ 83,500 Collection from the sale made on December 85000 $ 59,500 $ 15,000 $ 9,000 $ 83,500 Total $ 2,30,000 Answer 3) A) CASH COLLECTION - SCHEDULES June July August September October November December Budgeted Sales $ 50,000 $ 65,000 $ 70,000 $ 80,000 $ 90,000 $ 1,00,000 $ 85,000 Cash Collected in the month of Sale 70 % $ 35,000 $ 45,500 $ 49,000 $ 56,000 $ 63,000 $ 70,000 $ 59,500 15 % collected is the month after sale $ 7,500 $ 9,750 $ 10,500 $ 12,000 $ 13,500 $ 15,000 10% collected in the second month after sale $ 5,000 $ 6,500 $ 7,000 $ 8,000 $ 9,000 4% collected in the Third month after sale $ 2,000 $ 2,600 $ 2,800 $ 3,200 1% is uncollectable $ - $ - $ - Total Collection of the months $ 75,000 $ 84,600 $ 94,300 $ 86,700 Answer = 3)A) Total Cash Collection during the month of October from Credit Sales = $ 84,600 Answer = 3)B) There is no change in the solution of the second ánswer because there is no change in fourth quarter sales