Coyote Loco, Inc., a distributor of salsa, has the following historical collecti
ID: 2588526 • Letter: C
Question
Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales. 75 percent collected in the month of sale. 15 percent collected in the first month after sale. 5 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 $ 129,500 157,000 182,000 214,000 239,000 264,000 226,500 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. Total cash collections Total cash collectionsExplanation / Answer
Statement showing cash received during last quater
October
November
December
Sales made in:
June
-
-
-
July
9,560
(239,000 * 4%)
-
-
August
9,100
(182,000 * 5%)
7,280
(182,000 * 4%)
-
September
32,100
(214,000 * 15%)
10,700
(214,000 * 5%)
8,560
(214,000 * 4%)
October
179,250
(239,000 * 75%)
35,850
(239,000 * 15%)
11,950
(239,000 * 5%)
November
-
198,000
(264,000 * 75%)
39,600
(264,000 * 15%)
December
-
-
169,875
(226,500 * 75%)
Total
230,010
251,830
223,985
Total collection of Oct. = 230,010
Total collection of last quarter = 230,010 + 251,830 + 223,985
Total collection of last quarter = 711,825
October
November
December
Sales made in:
June
-
-
-
July
9,560
(239,000 * 4%)
-
-
August
9,100
(182,000 * 5%)
7,280
(182,000 * 4%)
-
September
32,100
(214,000 * 15%)
10,700
(214,000 * 5%)
8,560
(214,000 * 4%)
October
179,250
(239,000 * 75%)
35,850
(239,000 * 15%)
11,950
(239,000 * 5%)
November
-
198,000
(264,000 * 75%)
39,600
(264,000 * 15%)
December
-
-
169,875
(226,500 * 75%)
Total
230,010
251,830
223,985