Esplanade Companys credit sales have the following historical pattern: 70 percent collected in the month of sale

Question:

Esplanade Company’s credit sales have the following historical pattern:

70 percent collected in the month of sale

15 percent collected in the first month after month of sale

10 percent collected in the second month after month of sale

4 percent collected in the third month after month of sale

1 percent uncollectible

The following sales on open account (credit sales) have been budgeted for the last six months in 2010:

July	$60,000	October	$90,000
August	$70,000	November	$100,000
September	$80,000	December	$85,000

Required

1. Determine the estimated total cash collections from accounts receivable during October 2010.

2. Compute the estimated total cash collections during the fourth quarter from credit sales of the fourth quarter.

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...