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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Schedule of Cash Collections on Accounts Receivable and Cash Budget

Bennett Inc. found that about 15% of its sales during the month were for cash. Bennett has the following accounts receivable collection experience:

Chapter 9, Problem 58E, Schedule of Cash Collections on Accounts Receivable and Cash Budget Bennett Inc. found that about , example  1

Bennett’s anticipated sales for the next few months are as follows:

Chapter 9, Problem 58E, Schedule of Cash Collections on Accounts Receivable and Cash Budget Bennett Inc. found that about , example  2

(Note: Round all amounts to the nearest dollar.)

Required:

  1. 1. Calculate credit sales for May, June, July, and August.
  2. 2. Prepare a schedule of cash receipts for July and August.

1.

To determine

Calculate credit sales for the month of May, June, July, and August.

Explanation

Cash Budget:

Cash budget is a financial budget. It is prepared to assess inflows and outflows of cash to manage cash balance and timing related issues. Closing cash balance is computed by adding cash receipts and subtracting cash payments from the expected cash available in the beginning.

Computation of credit sales:

ParticularsAmount ($)
May: 
Expected sales290,000
Credit sales (85%×$290,000)  246,500
June: 
Expected sales280,000
Credit sales (85%×

2.

To determine

Present a schedule for cash collection.

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