Whitney's, Inc., sells on terms of 5% discount for "cash and carry" or 2/10, n/30 and estimates its total sales for the second calendar quarter of next year as follows: April, $300,000; May,$240,000; and June, $360,000. An analysis of operations indicates the following customer collection patterns:In month of sale:Cash at time of saleOn account, during discount periodOn account, after discount period:In month following sale:On account, during discount periodOn account, after discount periodIn second month following sale:On account, after discount periodAverage portion uncollectibleOn account, no discountMay SalesOn account, no discountOn account, with discountPrepare an estimate of the cash to be collected from customers during June.Estimated Collections from Customers in JuneApril SalesJune salesPortionofTotalSalesOn account, no discount30%15%10%$15%10%15%5%100% In month of sale:Cash at time of saleOn account, during discount periodOn account, after discount periodIn month following sale:On account, during discount period.On account, after discount periodIn second month following sale:On account, after discount periodAverage portion uncollectibleOn account, no discountMay SalesPrepare an estimate of the cash to be collected from customers during June.Estimated Collections from Customers in JuneApril SalesOn account, no discountOn account, with discountJune salesOn account, no discountOn account, with discountCashTotal estimated june collections$30%15%10%515%10%15%5%100%

Cash collections is based on the total sales figure obtained from the sales budget. The management…

#240,000; and June, $360,000. An analysis of oper Portion of Total Sales In month of sale: Cash at time of sale On account, during discount period On account, after discount period In month following sale: On account, during discount period On account, after discount period In second month following sale: On account, after discount period Average portion uncollectible 30% 15% 10% 15% 10% 15% 5% 100%

#240,000; and June, $360,000. An analysis of oper Portion of Total Sales In month of sale: Cash at time of sale On account, during discount period On account, after discount period In month following sale: On account, during discount period On account, after discount period In second month following sale: On account, after discount period Average portion uncollectible 30% 15% 10% 15% 10% 15% 5% 100%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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