Chapter 9 Assigned Problem 2 XYZ Company usually sells abou

Chapter 9 – Assigned Problem 2

                  XYZ Company usually sells about 40% of its merchandise during a month for cash, 40% collected in the month after sale, and 10% in two months after the sale – 10% of the sales are never collected. Total budgeted sales for the second quarter are as follows:

April

$200,000

May

100,000

June

150,000

Assume all questions relate to the month of June.

1.

What are the expected receipts in June from accounts receivable for sales made in April?

2.

What are the expected receipts in June from accounts receivable for sales made in May?

3.

What are the total expected cash receipts in June?

Solution

1. Expected Receipts in june from accounts receivable for sales made in April = (200000*10%) = 20000

2. expected receipts in June from accounts receivable for sales made in May = (100000*40%) = 40000

3. total expected cash receipts in June = (150000*40%)+40000+20000 = 120000