1. wally widgets provided the following information for the next 5 months: proje

Question

1. wally widgets provided the following information for the next 5 months: projected sales for april $10,000, may $12,000, june $15,000, july $13,000, august $14,000. all sales are on account. collections are estimated as follows: 30% during the month of sale, 50% at the month after the sale, 20% in the second month following the sale. one percent of all sales areestimated to be bad debts. bad debts are negligible and can be ignored. a) show the calculation of the amount of cash that wally widget is expected to receive during june from customers. Circle your answer. b) show the calculation of the amount of accounts receivable that wally widgets has on june 30. circle your answer   

Explanation / Answer

a. Cash collected during June = (30%*Sale of June) + (50%*Sale of may) + (20%*Sale of April)

= (30%*$15000) + (50%*$12000) + (20%*$10000)

= $4500 + $6000 + $2000

= $12500

b. Accounts receivables as at June 30 = (70%*Sale of June) + (20%*Sale of May)

= (70%*$15000) + (20%*$12000)

= $10500 + $2400

= $12900

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