Question 1 Preparing a Schedule of Cash Collections on Accounts Receivable Kailu
ID: 2475544 • Letter: Q
Question
Question 1
Preparing a Schedule of Cash Collections on Accounts Receivable
Kailua and Company is a legal services firm. All sales of legal services are billed to the client (there are no cash sales). Kailua expects that, on average, 20% will be paid in the month of billing, 50% will be paid in the month following billing, and 25% will be paid in the second month following billing. For the next five months, the following sales billings are expected:
Required:
Prepare a schedule showing the cash expected in payments on accounts receivable in August and in September. If an amount box does not require an entry, leave it blank or enter "0". Be sure to enter percentages as whole numbers.
Question 2
Preparing a Cash Budget
La Famiglia Pizzeria provided the following information for the month of October:
Sales are budgeted to be $166,000. About 85% of sales are cash; the remainder are on account.
La Famiglia expects that, on average, 70% of credit sales will be paid in the month of sale, and 28% will be paid in the following month.
Food and supplies purchases, all on account, are expected to be $124,000. La Famiglia pays 25% in the month of purchase and 75% in the month following purchase.
Most of the work is done by the owners, who typically withdraw $6,000 a month from the business as their salary. (Note: The $6,000 is a payment in total to the two owners, not per person.) Various part-time workers cost $7,300 per month. They are paid for their work weekly, so on average 90% of their wages are paid in the month incurred and the remaining 10% in the next month.
Utilities average $5,950 per month. Rent on the building is $4,100 per month.
Insurance is paid quarterly; the next payment of $900 is due in October.
September sales were $181,500 and purchases of food and supplies in September equaled $130,000.
The cash balance on October 1 is $2,147.
Required:
If required, round your answers to the nearest dollar.
1. Calculate the cash receipts expected in October.
$
2. Calculate the cash needed in October to pay for food purchases.
$
3. Prepare a cash budget for the month of October.
May $84000 June 100800 July 77000 August 86100 September 89000Explanation / Answer
Answer:1
Kailua and Company Schedule Particulars August September June: $100800*25% 25200 July: 77000*50% 38500 77000*25% 19250 August: 86100*20% 17220 86100*50% 43050 September: 89000*20% 17800 Total cash receipts 80920 80100Related Questions
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