Solution-Determine estimated cash receipts from accounts

Determine estimated cash receipts from accounts collections

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Reference no: EM132254683

Question - Papst Company is preparing its cash budget for the month of May. The following information is available concerning its accounts receivable (based on sales made to customers on open account):

Actual credit sales for March	$205,000
Actual credit sales for April	$265,000
Estimated credit sales for May	$390,000
Estimated collections in the month of sale	25%
Estimated collections in the first month after the month of sale	60%
Estimated collections in the second month after the month of sale	10%
Estimated provision for bad debts (made in the month of sale)	5%

The firm writes off all uncollectible accounts at the end of the second month after the month of sale.

Required -

Determine for Papst Company for the month of May:

1. The estimated cash receipts from accounts receivable collections.

2. The gross amount of accounts receivable at the end of the month (after appropriate write-off of uncollectible accounts).

3. The net amount of accounts receivable at the end of the month.

4. Recalculate requirements 1 and 2 under the assumption that estimated collections in the month of sale equal 60% and in the first month following the month of sale equal 25%.

Reference no: EM132254683

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Determine estimated cash receipts from accounts collections

Reference no: EM132254683

Reference no: EM132254683

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