Spencer Company has budgeted sales for the upcoming months as follows: February

Question

Spencer Company has budgeted sales for the upcoming months as follows:

February $ 610,000

March $ 619,000

April $ 654,000

May $ 679,000

70% of the sales are credit sales, the remainder are made in cash. Credit sales are collected 40% in the month of sale, 50% in the month following the sale, and 10% in the second month following the sale.

a. Compute Spencer’s cash receipts for April. (Do not round intermediate calculations.)

b. Compute Spencer’s cash receipts for May. (Do not round intermediate calculations.)

c. Compute the accounts receivable balance for May 31. (Do not round intermediate calculations.)

Explanation / Answer

a. Compute Spencer’s cash receipts for April. (Do not round intermediate calculations.)

b. Compute Spencer’s cash receipts for May. (Do not round intermediate calculations.)

c. Compute the accounts receivable balance for May 31. (Do not round intermediate calculations.)

Account receivable for may 31 = (654000*70%*10%+679000*70%*60%) = 330960

Cash receipt in april Cash sales (654000*30%) 196200 Collection from customer February sales (610000*70%*10%) 42700 March sales (619000*70%*50%) 216650 April sales (654000*70%*40%) 183120 Total cash receipts for april 638670

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