Cloudy Company had the following historical collection pattern for its credit sales:75% collected in the month of sale12% collected in the first month after month of sale8% collected in the second month after month of sale3% collected in the third month after month of sale2% uncollectibleThe sales on open account (credit sales) have been budgeted for the last six months of the year as shown below:$ 81,000$ 93,000$ 105,000$ 117,000$ 129,000$ 111,000JulyAugustSeptemberOctoberNovemberDecemberThe estimated total cash collections by Cloudy Company during November from collection of accounts receivable is:

Answered: nth of sale month after month of sale…

nth of sale month after month of sale ond month after month of sale month after month of sale unt (credit sales) have been budgeted for the la $ 81,000 $ 93,000 ¢ 105 000

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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Concept explainers

Cash budget

A cash budget is an estimate of an organization's cash flow for the future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future. If cash receipts are insufficient to cover future expenses, an organization may plan to obtain funds from other sources. After estimating the sales, purchase, and capital expenditure budgets for the year, management develops a cash budget. These budgets are created to ensure that an organization's cash flow is managed. It is important to note that only cash transactions are recorded when actual cash enters and exits an organization.

Question

Cloudy Company had the following historical collection pattern for its credit sales:
75% collected in the month of sale
12% collected in the first month after month of sale
8% collected in the second month after month of sale
3% collected in the third month after month of sale
2% uncollectible
The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below:
$ 81,000
$ 93,000
$ 105,000
$ 117,000
$ 129,000
$ 111,000
July
August
September
October
November
December
The estimated total cash collections by Cloudy Company during November from collection of accounts receivable is:

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