Fresplanade Co.had the following historical pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after sale
8% collected in the second month after sale
3% collected in the third month after sale
2% uncollectible
The sales on open account (credit sales)have been budgeted for the last six months of the year as shown below:
July $72,000
August $84,000
September $96,000
October $108,000
November $120,000
December $102,000
The estimated total cash collections during November from accounts receivable is:

Question

Quizplus · Accepted Answer

The cash collections in November include: 75% of November sales ($120,000 * 75% = $90,000), 12% of October sales ($108,000 * 12% = $12,960), 8% of September sales ($96,000 * 8% = $7,680), and 3% of August sales ($84,000 * 3% = $2,520). Total = $90,000 + $12,960 + $7,680 + $2,520 = $113,160.