13 - 33 Estimate Cash Collections Minot Corporation is preparing its cash budget

Question

13 - 33 Estimate Cash Collections

Minot Corporation is preparing its cash budget for August. The following information is available concerning its accounts receivable:

Required

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

Estimated credit sales for August $180,000 Actual credit sales for July $135,000 Estimated collections in August for credit sales in August 20% Estimated collections in August for credit sales in July 75% Estimated collections in August for credit sales prior to July $14,400 Estimated write-offs in August for uncollectible credit sales $7,200 Estimated provision for bad debts in August for credit sales in August $6,300

Explanation / Answer

Collection from August sales ($180,000*20%) $    36,000 Collection from July sales ($135,000*75%) $ 101,250 Collection from prior july sales $    14,400 Total cash collection in the month of August $ 151,650

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