Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 18, Problem 10QP
Calculating Cash Collections [LO3] The following is the sales budget for Harp, Inc., for the first quarter of 2015:
Credit sales are collected as follows:
65 percent in the month of the sale
20 percent in the month after the sale
15 percent in the second month after the sale
The accounts receivable balance at the end of the previous quarter was $93,000 ($62,000 of which was uncollected December sales).
a. Compute the sales for November.
b. Compute the sales for December.
c. Compute the cash collections from sales for each month from January through March.
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Schedule of Cash Collections on Accounts Receivable and Cash BudgetBennett Inc. found that about 15% of its sales during the month were forcash. Bennett has the following accounts receivable collectionexperience:
Percent collected in the month of sale
Percent collected in the month after the sale
Percent collected in the second month after the sale
25
68
5
Bennett's anticipated sales for the next few months are as follows:
AprilMayJuneJulyAugust
$250,000290,000280,000295,000300,000
(Note: Round all amounts to the nearest dollar.)
Required:1. Calculate credit sales for May, June, July, and August.2. Prepare a schedule of cash receipts for July and August.
1
Schedule of Cash Collections on Accounts Receivable and Cash Budget
Bennett Inc. found that about 30% of its sales during the month were for cash. Bennett has the following accounts receivable payment experience:
Percent paid in the month of sale
25
Percent paid in the month after the sale
68
Percent paid in the second month after the sale
5
Bennett's anticipated sales for the next few months are as follows:
April
$250,000
May
290,000
June
280,000
July
295,000
August
300,000
Chapter 18 Solutions
Fundamentals of Corporate Finance
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