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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Schedule of cash collections of accounts receivable
Innovative Office Inc. has "cash and carry" customers and credit customers. Innovative Office estimates that 30% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers. 75% pay their accounts in the month of sale, while the remaining 25% pay their accounts in the month following the month of sale. Projected sales for the first three months of 20Y4 are as follows:

The Accounts Receivable balance on December 31. 20Y3. was $180,000.
Prepare a schedule of cash collections from sales for January. February, and March.

To determine

Concept Introduction:

Budgets:

Budgets are prepared to estimate the revenue, costs, receipts and payments for the business. There are several types of budgets prepared for a business. Few major types of budgets prepared are as follows:

  • Sales budget
  • Cash Collection budget
  • Production budget
  • Raw material purchase budget
  • Expenses Budgets
  • Cash disbursement budget

To Prepare:

A Schedule of Cash Collection from Sales

Explanation

The Schedule of Cash Collection from Sales is prepared as follows:

    Schedule of Cash Collection
    January February March
    Sales $ (A) $ 1,200,000 $ 1,450,000 $ 1,600,000
    Cash Sales (B) =A*60% $ 360,000 $ 435,000 $ 480,000
    On Account S...

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