Ridenour Ltd. is preparing its first-quarter monthly cash budget for 2011. The following information is available about
Question:
Ridenour Ltd. is preparing its first-quarter monthly cash budget for 2011. The following information is available about actual 2010 sales and expected 2011 sales:
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Tracing collections from prior year monthly sales and discussions with the credit manager helped develop a profile of collection behavior patterns.
Of a given month's sales, 40 percent is typically collected in the month of sale. Because the company terms are 1 percent (end of month) net 30, all collections within the month of sale are net of the 1 percent discount. Of a given month's sales, 30 percent is collected in the month following the sale. The remaining 30 percent is collected in the second month following the month of the sale. Bad debts are negligible and should be ignored.
a. Prepare a schedule of cash collections for Ridenour Ltd. for January, February, and March 2011.
b. Calculate the Accounts Receivable balance at March 31,2011.
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... Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment. Its primary purpose is to provide the...
Step by Step Answer:
a January February March Nov sales 30 83000 24900 Dec sales 30 76000 22800 De...View the full answer
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
