Receivables are booked gross and credit terms of sale

Info icon This preview shows pages 40–43. Sign up to view the full content.

Receivables are booked gross and credit terms of sale are: 2/10, n/30. 50% of the billings are collected within the discount period, 30% are collected by the end of the month, 15% are collected by the end of the second month, and 5% become uncollectible. Budgeted cash collections for Wallstead Company during April would be a. $343,300. b. $347,000. c. $349,300. d. $353,000.
Image of page 40

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

41 106. CSO: 1B5b LOS: 1B5u Tip-Top Cleaning Supply carries a large number of different items in its inventory, giving the firm a competitive advantage in its industry. Below is part of Tip-Top’s budget for the first quarter of next year. Sales $855,000 Cost of goods sold 425,000 Rent and salary expenses 375,000 Historically, all of the sales are on account and are made evenly over the quarter. 5% of all sales are determined to be uncollectible and written off. The balance of the receivables is collected in 50 days. This sales and collection experience is expected to continue in the first quarter. The projected balance sheet for the first day of the quarter includes the following account balances. Cash $ 10,000 Accounts receivable (net) 450,000 Inventory 900,000 Accounts payable 800,000 How much cash can Tip-Top anticipate collecting in the first quarter (based on a 360-day year)? a. $811,000. b. $830,000. c. $901,250. d. $902,500. 107. CSO: 1B5b LOS: 1B5u Monroe Products is preparing a cash forecast based on the following information. Monthly sales: December $200,000; January $200,000; February $350,000; March $400,000. All sales are on credit and collected the month following the sale. Purchases are 60% of next month’s sales and are paid for in the month of purchase. Other monthly expenses are $25,000, including $5,000 of depreciation. If the January beginning cash balance is $30,000, and Monroe is required to maintain a minimum cash balance of $10,000, how much short-term borrowing will be required at the end of February? a. $60,000. b. $70,000. c. $75,000. d. $80,000.
Image of page 41
42 108. CSO: 1B5b LOS: 1B5u Prudent Corporation’s budget for the upcoming accounting period reveals total sales of $700,000 in April and $750,000 in May. The sales cash collection pattern is 20% of each month’s sales are cash sales. 5% of a month’s credit sales are uncollectible. 70% of a month’s credit sales are collected in the month of sale. 25% of a month’s credit sales are collected in the month following the sale. If Prudent anticipates the cash sale of a piece of old equipment in May for $25,000, May’s total budgeted cash receipts would be a. $560,000. b. $702,500. c. $735,000. d. $737,500. 109. CSO: 1B5b LOS: 1B5u ANNCO sells products on account, and experiences the following collection schedule. In the month of sale 10% In the month after sale 60% In the second month after sale 30% At December 31, ANNCO reports accounts receivable of $211,500. Of that amount, $162,000 is due from December sales, and $49,500 from November sales. ANNCO is budgeting $170,000 of sales for January. If so, what amount of cash should be collected in January? a. $129,050. b. $174,500.
Image of page 42

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 43
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern