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Financial & Managerial Accounting
Found in: Page 915
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Wells Company reports the following sales forecast: September, $55,000; October, $66,000; and November, $80,000. All sales are on account. Collections of credit sales are received as follows: 25% in the month of sale, 60% in the first month after sale, and 10% in the second month after sale. 5% of all credit sales are written off as uncollectible. Prepare a schedule of cash receipts for November.

The total cash receipt for the month of November is $59,600.

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Step by Step Solution

Given then information as

The September, October, and November sales forecasts are $55,000, $66,000, and $80,000.

Receivables rate are 25%, 60% and 10%.

Preparation of the schedule

Wells Company

Schedule for cash receipts

For the month of November

Particulars

Amount

Collections of November sales

$20,000

Add: Collection of September receivables

$33,000

Add: Collection of October receivable

$6,600

Total cash receipt

$59,600

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