### Budgeting Cash Collections**Scenario:**Spencer Consulting, which invoices its clients on terms 2/10, n/30, had credit sales for May and June of $56,000 and $64,000, respectively. Analysis of Spencer's operations indicates that the pattern of customers' payments on account is as follows (percentages are of total monthly credit sales):**Table: Customers' Payments on Account Percentages**| | Receiving Discount | Beyond Discount Period | Totals ||------------------------|--------------------|------------------------|--------|| In month of sale | 50% | 20% | 70% || In month of following sale | 15% | 10% | 25% || Uncollectible accounts, returns, and allowances | | | 5% || Totals | | | 100% |**Detailed Explanation of Table:**- **In month of sale:** 70% of the total monthly credit sales are collected within the same month they are invoiced. This breaks down to 50% taking the discount available (receiving discount) and an additional 20% paying beyond the discount period.- **In month of following sale:** 25% of the sales are collected in the month following the sale. 15% take the discount and 10% pay later.- **Uncollectible accounts, returns, and allowances:** 5% of the sales are predicted to be uncollectible or need other adjustments.**Task:**Determine the estimated cash collected on customers' accounts in June.$ [Input Field]This exercise will help you understand how to predict cash flow based on historical payment patterns and anticipate financial liquidity.---*Note: Educational websites use scenarios and exercises like these to teach principles of accounting and financial forecasting by giving real-world-type problems for students to solve.*

June collections= (25% of may collections)+ (75% of June collections) Where, 25% of May collections…

Spencer Consulting, which invoices its clients on terms 2/10, n/30, had credit sales for May and June of $56,000 and $64,000, respectively. Analysis of Spencer's operations indicates that the pattern of customers' payments on account is as follows (percentages are of total monthly credit sales): Receiving Discount Beyond Discount Period Totals In month of sale In month of following sale 50% 20% 70% 15% 10% 25% Uncollectible accounts, returns, and allowances 5% 100% Determine the estimated cash collected on customers' accounts in June.

Spencer Consulting, which invoices its clients on terms 2/10, n/30, had credit sales for May and June of $56,000 and $64,000, respectively. Analysis of Spencer's operations indicates that the pattern of customers' payments on account is as follows (percentages are of total monthly credit sales): Receiving Discount Beyond Discount Period Totals In month of sale In month of following sale 50% 20% 70% 15% 10% 25% Uncollectible accounts, returns, and allowances 5% 100% Determine the estimated cash collected on customers' accounts in June.

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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A company has net credit sales of $499000 for the year and it estimates that uncollectible accounts will be 3% of its Account Receivables balance. If Allowance for Doubtful Accounts has a credit balance of $2000 prior to adjustment, its balance after adjustment will be a credit of $16970. $14970. $12970. $14910.
Current Attempt in Progress Crane Company has the following accounts in its general ledger at July 31: Accounts Receivable $32,800 and Allowance for Doubtful Accounts $2,050. During October, the following transactions occurred. Oct. 15 Sold $13,100 of accounts receivable to Nelson Factors, Inc. who assesses a 4% finance charge. 25 Made sales of $800 on VISA credit cards. The credit card service charge is 3%. Journalize the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Credit
Bolton sold a customer service contract with a price of $37,000 to Sammy's Wholesale Company. Bolton offered terms of 1/10, n/30 and uses the gross method. Required: Hide Prepare the journal entry assuming the payment is made after 10 days (after the discount period). Account and Explanation Debit Credit Record collection of accounts receivable
At the end of the year, a company reports a balance in its Allowance for Uncollectible Accounts of $2,000 (credit) before any year-end adjustment. The company estimates future uncollectible accounts to be 2% of credit sales for the year. Credit sales for the year total $282,000. Record the adjustment for the allowance for uncollectible accounts using the percentage-of-credit-sales method on a balance sheet.
Gregg company uses the allowance method for recording its expected credit losses. It estimates credit losses at 3% of credit sales, which were $900,000 during the year. On December 31 the accounts receivable balance was 150,000, and the allowance for doubtful accounts had a credit balance of 12,200 before adjustment. A. Prepare the adjusting entry to record the credit losses for the year. B. Show how accounts receivable and the allowance for doubtful accounts would appear in the December 31 balance sheet. The top 2 shaded blanks have the options of Bad debts expense, allowance for doubtful accounts. The bottom 2 shaded blanks have the options of accounts receivable, less: allowance for doubtful accounts.
During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $120,000, of which $60,000 was on credit. At the start of 2021, Accounts Receivable showed a $12,000 debit balance and the Allowance for Doubtful Accounts showed a $500 credit balance. Collections of accounts receivable during 2021 amounted to $58,000. Data during 2021 follow: a. On December 10, a customer balance of $1,000 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: 1. Give the required journal entries for the two events in December. 2-a. Show how the amounts related to Bad Debt Expense would be reported on the income statement. 2-b. Show how the amounts related to Accounts Receivable would be reported on the balance sheet. 3. On the basis of the data available, does the 2 percent rate appear to be reasonable?
On June 30, Premier Party Planners had a $35,000 balance in AccountsReceivable and a $2,752 credit balance in Allowance for Uncollectible Accounts. DuringJuly, Premier made credit sales of $193,000. July collections on account were $164,000,and write-offs of uncollectible receivables totaled $2,870. Uncollectible-accounts expense isestimated as 3% of credit sales. No sales returns are expected. Ignore cost of goods sold.Requirements1. Journalize sales, collections, write-offs of uncollectibles, and uncollectible-accountexpense by the allowance method during July. Explanations are not required.2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts,and Net Accounts Receivable at July 31. How much does Premier expect to collect?3. Show how Premier Party Planners will report accounts receivable and net sales on its July31 balance sheet and income statement for the month ended July 31.
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Determination of credit sales Mervyn’s Fine Fashions has an average collection period of 30 days. The accounts receivable balance is $78,000. What is the value of its credit sales?