Duluth Company is preparing its cash budget for December. The following informat

Question

Duluth Company is preparing its cash budget for December. The following information is available concerning its accounts receivable:


Estimated credit sales for December $ 300,000
Actual credit sales for November $ 225,000
Estimated collections in December for credit sales in December 25 %
Estimated collections in December for credit sales in November 70 %
Estimated collections in December for credit sales prior to November $ 24,000
Estimated write-offs in December for uncollectible credit sales $ 12,000
Estimated provision for bad debts in December for credit sales in December $ 10,500

Required:

What is the estimated amount of cash receipts from accounts receivable collections in December?

Explanation / Answer

Credit sales in Dec after adjustment of uncollectible credit sales and bad debt= $ 300,000 -$ 12,000 - $ 10,500 = $277,500 estimated amount of cash receipts = 25 % *$277,500 + 70 % *$ 225,000 + 24,000 = $250,875

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