Exercise 7-5A Determining cash receipts from
Carmen’s Dress Delivery operates a mail-order business that sells clothes designed for frequent travelers. It had sales of $400,000 in December. Because Carmen’s Dress Delivery is in the mail-order business, all sales are made on account. The company expects a 30 percent drop in sales for January. The balance in the Accounts Receivable account on December 31 was $60,000 and is budgeted to be $41,000 as of January 31.
Required
a. Determine the amount of cash Carmen’s Dress Delivery expects to collect from accounts receivable during January.
b. Is it reasonable to assume that sales will decline in January for this type of business? Why or why not?
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- Sales and notes receivable transactions The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems. Jan. 3. Loaned 18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10. Sold merchandise on account to Bradford Co., 24,000. The cost of the merchandise sold was 14,400. 13. Sold merchandise on account to Dry Creek Co., 60,000. The cost of merchandise sold was 54,000. Mar. 12. Accepted a 60-day, 7% note for 24,000 from Bradford Co. on account. 14. Accepted a 60-day, 9% note for 60,000 from Dry Creek Co. on account. Apr. 3. Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.) May 11. Received from Bradford Co. the amount due on the note of March 12. 13. Dry Creek Co. dishonored its note dated March 14. July 12. Received from Dry Creek Co. the amount owed on the dishonored note, plus interest for 60 days at 12% computed on the maturity value of the note. Aug. 1. Received from Trina Gelhaus the amount due on her note of April 3. Oct. 5. Sold merchandise on account to Halloran Co., 13,500. The cost of the merchandise sold was 8,100. 15. Received from Halloran Co. the amount of the invoice of October 5. Instructions Journalize the entries to record the transactions.arrow_forwardSales and notes receivable transactions The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer sells and installs home and business security systems. Jan. 3. Loaned 18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10. Sold merchandise on account to Bradford Co., 24,000. The cost of goods sold was 14,400. I3. Sold merchandise on account to Dry Creek Co., 60,000. The cost of goods sold was 54,000. Mar. 12. Accepted a 60-day, 7% note for 24,000 from Bradford Co. on account. 14. Accepted a 60-day, 9% note for 60,000 from Dry Creek Co. on account. Apr. 3. Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.) May 11. Received from Bradford Co. the amount due on the note of March 12. 13. Dry Creek Co. dishonored its note dated March 14. July 12. Received from Dry Creek Co. the amount owed on the dishonored note, plus interest for 60 days at 12% computed on the maturity value of the note. Aug. 1. Received from Trina Gelhaus the amount due on her note of April 3. Oct. 5. Sold merchandise on account, terms 2/10, n/30, to Halloran Co., 13,500. Record the sale net of the 2% discount. The cost of goods sold was 8,100. 15. Received from Halloran Co. the amount of the invoice of October 5, less 2% discount. Instructions Journalize the entries to record the transactions.arrow_forwardSales and notes receivable transactions The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems. Jan. 3. Loaned 18,000 cash to Trina Gelhaus, receiving a 90-day, 8 % note. Feb. 10. Sold merchandise on account to Bradford Co., 24, 000. The cost of the merchandise sold was 14,400. 13. Sold merchandise on account to Dry Creek Co., 60,000. The cost of merchandise sold was 54,000. Mar. 12. Accepted a 60-day, 7% note for 24,000 from Bradford Co. on account. 14. Accepted a 60-day, 9% note for 60,000 from Dry Creek Co. on account. Apr. 3. Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.) May 11. Received from Bradford Co. the amount due on the note of March 12. 13. Dry Creek Co. dishonored its note dated March 14. July 12. Received from Dry Creek Co. the amount owed on the dishonored note, plus interest for 60 days at 12% computed on the maturity value of the note. Aug. 1. Received from Trina Gelhaus the amount due on her note of April 3. Oct. 5.Sold merchandise on account to Halloran Co. 13,500. The cost of the merchandise sold was 8, 100. 15 Received from Halloran Co. the amount of the invoice of October 5, less 2 % discount. Instructions Journalize the entries to record the transactions.arrow_forward
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