Problem 1610 Calculating Cash Collections LO 3 The following

Problem 16-10 Calculating Cash Collections [LO 3]

The following is the sales budget for Segura, Inc., for the first quarter of 2013:

January

February

March

  Sales budget

$138,000

$151,000

$163,000

Credit sales are collected as follows:

65 percent in the month of the sale

20 percent in the month after the sale

15 percent in the second month after the sale

The accounts receivable balance at the end of the previous quarter was $94,000 ($69,000 of which was uncollected December sales).

Required:

(a)

Compute the sales for November. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

  Sales

$

(b)

Compute the sales for December. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

  Sales

$

(c)

Compute the cash collections from sales for each month from January through March. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Cash Collection

  January

$     

  February

$    

  March

$    

References

eBook & Resources

Solution

a.sales for november.

out of closing balance of accounts receivalble $69,000 belongs to december sales.

=> ($94,000 - $69,000) =>$25,000 belongs to november sales.

since (65%+ 20% =>85%) of november sales is collected in november and december

=>this $25,000 represents 15% of november sales

=> november sales = $25,000 /15%

=>$166,666.67..............(rounded to two decimals).

b.sales for december.

$69,000 is december sale uncollected.

=> 65% is collected in december

=>$69,000 represents (100% -65%=>35% of december sale)

=> december sale = $69,000/35% =>$197,142.86.

c.cash collection for each month from january to march.