Problem:
1. The following data are given for Erich From Stores:
| |
September
|
October
|
November
|
December
|
| |
Actual
|
Actual
|
Estimated
|
Estimated
|
|
Cash sales
|
$ 7,000
|
$ 6,000
|
$ 8,000
|
$ 6,000
|
|
Credit sales
|
50,000
|
48,000
|
62,000
|
80,000
|
|
Total sales
|
57,000
|
54,000
|
70,000
|
86,000
|
Past experience indicates that net collections normally occur in the following pattern:
-No collections are made in the month of sale.
-Eighty percent of the sales of any month are collected in the following month.
-Nineteen percent of sales are collected in the second following month.
-One percent of sales are uncollectible.
1. Calculate the total cash receipts for November and December.
2. Compute the accounts receivable balance at November 30 if the October 31 balance is $50,000