Sales on account for the first two months of the current year are budgeted as fo

Question

Sales on account for the first two months of the current year are budgeted as follows: Jan. $ 309,000 Feb. 396,000 All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows: Collections within the month of sale: Within discount period 60 % After discount period 15 Collections within the month following sale: Within discount period 15 After discount period 7 Returns, allowances, and uncollectibles 3 Total 100 % Compute the estimated cash collections on accounts receivable for the month of February. (Omit the "$" sign in your response.) Estimated cash collections $

Explanation / Answer

Answer:

Particulars Amount $ Sales 396,000 Cash Collections Cash = Sales *60% * 98% 232,848 Cash = Sales *15% 59,400 January month collection 309,000*15% 46,350 January month collection 309,000*7% 21,630 Total Estimated Cash collection for feb-15 360,228

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