Coyote Loco, Inc., a distributor of salsa, has the following historical collecti

Question

Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales 70 percent collected in the month of sale 15 percent collected in the first month after sale 10 percent collected in the second month after sale 4 percent collected in the third month after sale 1 percent uncollectible The sales on account have been budgeted for the last seven months as follows June July August September October November December $ 49,000 60,000 70,000 80,000 90,000 100,000 85,000 Required 1. Compute the estimated total cash collections during October from credit sales. 2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter. 1. Total cash collections 2. Total cash collections

Explanation / Answer

1 Cash Collection October July sales 2400 =60000*4% August sales 7000 =70000*10% September sales 12000 =80000*15% October sales 63000 =90000*70% Total cash collections 84400 2 October November December Quarter October sales 63000 13500 9000 November sales 70000 15000 December sales 59500 Total cash collections 63000 83500 83500 230000 Total cash collections during Quarter 4 from quarter 4 sales = $230000

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