Ed’s Waterbeds has made the following sales projections for the next six months. All sales are credit sales. March $ 44,000 June $ 48,000 April 50,000 July 56,000 May 39,000 August 58,000 Sales in January and February were $47,000 and $46,000 respectively. Experience has shown that 5 percent of total sales are uncollectible, 40 percent are collected in the month of sale, 50 percent are collected in the following month, and 5 percent are collected two months after sale. a. Prepare a monthly cash receipts schedule for the firm for March through August. Ed’s Waterbeds Cash Receipts Schedule January February March April May June July August Sales $ $ $ $ $ $ $ $ Collections of current sales Collections of prior month's sales Collections of sales 2 months earlier Total cash receipts $ $ $ $ $ $ b. Of the sales expected to be made during the six months from March to August, how much will still be uncollected at the end of August? How much of this is expected to be collected later? Amount Uncollected $ Expected to be collected $
Ed’s Waterbeds has made the following sales projections for the next six months. All sales are credit sales. March $ 44,000 June $ 48,000 April 50,000 July 56,000 May 39,000 August 58,000 Sales in January and February were $47,000 and $46,000 respectively. Experience has shown that 5 percent of total sales are uncollectible, 40 percent are collected in the month of sale, 50 percent are collected in the following month, and 5 percent are collected two months after sale. a. Prepare a monthly cash receipts schedule for the firm for March through August. Ed’s Waterbeds Cash Receipts Schedule January February March April May June July August Sales $ $ $ $ $ $ $ $ Collections of current sales Collections of prior month's sales Collections of sales 2 months earlier Total cash receipts $ $ $ $ $ $ b. Of the sales expected to be made during the six months from March to August, how much will still be uncollected at the end of August? How much of this is expected to be collected later? Amount Uncollected $ Expected to be collected $
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 1PROB
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Question
Ed’s Waterbeds has made the following sales projections for the next six months. All sales are credit sales.
March | $ | 44,000 | June | $ | 48,000 |
April | 50,000 | July | 56,000 | ||
May | 39,000 | August | 58,000 |
Sales in January and February were $47,000 and $46,000 respectively.
Experience has shown that 5 percent of total sales are uncollectible, 40 percent are collected in the month of sale, 50 percent are collected in the following month, and 5 percent are collected two months after sale.
a. Prepare a monthly cash receipts schedule for the firm for March through August.
Ed’s Waterbeds Cash Receipts Schedule |
||||||||
January | February | March | April | May | June | July | August | |
Sales | $ | $ | $ | $ | $ | $ | $ | $ |
Collections of current sales | ||||||||
Collections of prior month's sales | ||||||||
Collections of sales 2 months earlier | ||||||||
Total cash receipts | $ | $ | $ | $ | $ | $ |
b. Of the sales expected to be made during the six months from March to August, how much will still be uncollected at the end of August? How much of this is expected to be collected later?
Amount | ||
Uncollected | $ | |
Expected to be collected | $ | |
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