tpurchases e remaining balance is paid in the month the month of purciäse atid t
ID: 2518788 • Letter: T
Question
tpurchases e remaining balance is paid in the month the month of purciäse atid th in following the purchase. On January 1, 20 prior-year purchases. X5, the company owed 820,000 for Prepare a sch . What amount of accounts payable will be outstanding on March 31? pri chedule of cash payments for January, February, and March. stick Poultry Company expects to have the following sales in the Major Drums first quarter of 20X5: January February 80, March $70,000 000 90,000 Historical data shows that the company collects 80 percent of its sales in the month of the sale and the remaining balance is collected in the month follow- ing the sale. On January 1, 20X5, accounts receivable related to December sales totaled $10,000. a. Compute total sales for December 20X4. b. P repare a schedule of cash receipts for January, February, and March. at amount of accounts receivable will be outstanding on March 31? the first th in the fourth Company estimates that it will sell 1,000 units of its product in each of scal quarters of the coming year. It expects to sell 1,500 units duot sells for $10 per unit. The company presi- a quarter whenExplanation / Answer
1) As 80% of the month's total sales is collected in the month of sale and remaining 20% of total sales is calculated in the month following the sale, the accounts receivable at the beginning of January will be 20% of total sale of december. Total sales for December 20X4 is calculated as follows:-
Total sales for December 20X4 = Accounts Receivable at the end of December/20%
= $10,000/20% = $50,000
2) Schedule of Cash Receipts (Amounts in $)
3) Accounts Receivable at the end of March will be equal to 20% of total sales of March (i.e. $90,000*20% = $18,000). Hence the amount of accounts receivable outstanding on March 31 is $18,000.
Particulars January February March Collection for the month of : December (20% of $50,000) 10,000 0 0 January (80% of $70,000 in Jan and 20% in Feb) 56,000 14,000 0 February (80% of $80,000 in Feb and 20% in Mar) 0 64,000 16,000 March (80% of $90,000 in Mar and 20% in Apr) 0 0 72,000 Total Cash Receipts 66,000 78,000 88,000Related Questions
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