he Accounts Receivable balance at October 1, 2000, for Skyscraper Architects was $606,900. Of that balance, $450,000 represents remaining Accounts Receivable from September billings. The normal collection pattern for the firm is 20 percent of billings in the month of service, 55 percent in the month after service, and 22 percent in the second month following service. The remaining billings are uncollectible. October billings are expected to be $700,000. a. What were August billings for Skyscraper Architects? b. What amount of September billings is expected to be uncollectible? c. What are projected cash collections in October 2000 for the firm?
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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a. What were August billings for Skyscraper Architects?
b. What amount of September billings is expected to be uncollectible?
c. What are projected cash collections in October 2000 for the firm?
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