Papst Company is preparing its cash budget for the month of May. The following information is available
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Question:
Papst Company is preparing its cash budget for the month of May. The following information is available regarding your accounts receivable (based on sales made to customers on open account): |
March Actual Credit Sales | ps | 185.000 | |
April Actual Credit Sales | ps | 237,000 | |
Estimated credit sales for May | ps | 342,000 | |
Estimated collections in the month of sale | 25% | ||
Estimated collections in the first month after the month of sale | 60% | ||
Estimated collections in the second month after the month of sale | 10% | ||
Estimated provision for bad debts (made in the month of sale) | 5% | ||
The company writes off all uncollectible accounts at the end of the second month after the month of sale. |
Required: |
Determine for Papst Company for the month of May: |
1. | The estimated cash receipts from the collection of accounts receivable. |
2. | The gross amount of accounts receivable at the end of the month (after the corresponding write-off of bad debts). |
3. | The net amount of accounts receivable at the end of the month. |
4. | Recalculate requirements (1) and (2) assuming that the estimated collections in the month of sale = 60% and in the first month following the month of sale = 25%. |
Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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