Question

Sales on account for the first two months of the current year are budgeted as follows:

Answer 1

Answer:

$705,400

Explanation:

Computation for the estimated cash collections on accounts receivable for the month of February.

January sales received in February:

Within discount period $102,900

[ (15%*$700,000) x 0.98]

After discount period $49,000

( 7%* $700,000)

February Sales received in February:

Within discount period $441,000

[(60% * $750,000) x 0.98]

After discount period $112,500

(15% of $750,000)

Estimated cash collections for February $705,400

($102,900+$49,000+$441,000+$112,500)

Therefore the estimated cash collections on accounts receivable for the month of February is $705,400