The treasurer of Yoda Inc. needs to estimate cash collections from accounts rece
ID: 2529231 • Letter: T
Question
The treasurer of Yoda Inc. needs to estimate cash collections from accounts receivable for September, October, and November 2018. Forty percent of the company’s customer’s pay in cash the rest are credit customers. The collection pattern for the credit customers is 20% in the month of the sale and 80% in the following month. They have zero uncollectible accounts. Estimated total sales are as follows:
August $70,000
September $80,000
October $90,000
November $100,000
a. What is Yoda’s cash collections for September, October, and November?
- September cash collections:
- October cash collections:
- November cash collections:
b. The accounts receivable balance at the end of November will be:
Explanation / Answer
Calculation of Budgeted Cash Payment for the month of September, October & November August September October November Purchases $ 70,000 $ 80,000 $ 90,000 $ 1,00,000 Less : Cash Collected 40% (A) $ 28,000 $ 32,000 $ 36,000 $ 40,000 Balance sales on credit $ 42,000 $ 48,000 $ 54,000 $ 60,000 20 % of the credit sales will be collected in the same month (B) $ 8,400 $ 9,600 $ 10,800 $ 12,000 80 % of the credit sales will be collected in the following month ('C) $ 33,600 $ 38,400 $ 43,200 (80% of Aug credit Sales ) (80% of Sept credit Sales ) (80% of OCt credit Sales ) Total cash collection (A +B + C) $ 36,400 $ 75,200 $ 85,200 $ 95,200 Answer = A) September Cash Collection = $ 75,200 October Cash Collection = $ 85,200 November Cash Collection = $ 95,200 Answer =B) The Account receivable at the end of the november is 80% balance of the credit sale made in the month of Nov = $ 60,000 Xx 80% = $ 48,000
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