Sales on account for the first two months of the current year are budgeted as follows: Jan.
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Jan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $700,000
Feb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000
All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows:
Collections within the month of sale:
Within discount period ... . . . . . . . . . . . . . . . . . . . . . 60%
After discount period . . . . . . . . . . . . . . . . . . . . . . . . 15
Collections within the month following sale:
Within discount period . . . . . . . . . . . . . . . . . . . . . 15
After discount period . . . . . . . . . . . . . . . . . . . . . . . . 7
Returns, allowances, and uncollectibles . . . . . . . . . . 3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 100%
Compute the estimated cash collections on accounts receivable for the month of February.
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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