Sales on account for the first two months of the current year are budgeted as follows: January February $ 964,000 520,000 All sales are made on terms of 2/10, n/30 (2 percent discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows: Collections within the month of sale: Within discount period After discount period 70% 10 Collections within the month following sale: Within discount period After discount period Returns, allowances, and uncollectibles Total Required: Compute the estimated cash collections on accounts receivable for the month of February. Estimated cash collections 12 6 2 100%
Sales on account for the first two months of the current year are budgeted as follows: January February $ 964,000 520,000 All sales are made on terms of 2/10, n/30 (2 percent discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows: Collections within the month of sale: Within discount period After discount period 70% 10 Collections within the month following sale: Within discount period After discount period Returns, allowances, and uncollectibles Total Required: Compute the estimated cash collections on accounts receivable for the month of February. Estimated cash collections 12 6 2 100%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Sales on account for the first two months of the current year are budgeted as follows:
January
February
$ 964,000
520,000
All sales are made on terms of 2/10, n/30 (2 percent discount if paid in 10 days, full amount by 30 days); collections on accounts
receivable are typically made as follows:
Collections within the month of sale:
Within discount period
After discount period
Collections within the month following sale:
Within discount period
70%
10
Estimated cash collections
12
6
2
100%
After discount period
Returns, allowances, and uncollectibles
Total
Required:
Compute the estimated cash collections on accounts receivable for the month of February.
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