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Chapter 22: Q4TI (page 1228)

Question: Meeks Company has the following sales for the first quarter of 2019:

January February March Cash sales \( 5,000 \) 5,500 \( 5,250 Sales on account 15,000 14,000 14,500 Total sales \) 20,000 \( 19,500 \) 19,750 Sales on account are collected the month after the sale. The Accounts Receivable balance on January 1 is $12,500, the amount of December鈥檚 sales on account. Calculate the cash receipts from customers for the first three months of 2019.

Short Answer

Expert verified

Answer

The cash receipts from customers in January, February, and March is$17,500, $20,500, and $19,250, respectively.

Step by step solution

01

Meaning of Accounts Receivable

Accounts receivable refers to the amount that a business will receive from its customers against which already credit sales are made.

02

Statement showing the cash receipts from customers 

Particulars

January

February

March

Account receivable balance 1 January

$12,500

Cash sales

$5,000

$5,500

$5,250

Credit sales

-

$15,000

$14,000

Total cash receipts from customers

$17,500

$20,500

$19,250

Note:The amount of 2018 December鈥檚 sales will be received in January 2019.

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Most popular questions from this chapter

Camp Company is a sporting goods store. The company sells a tent that sleeps six people. The store expects to sell 250 tents in 2018 and 280 tents in 2019. At the beginning of 2018, Camp Company has 25 tents in Merchandise Inventory and desires to have 5% of the next year鈥檚 sales available at the end of the year. How many tents will Camp Company need to purchase in 2018?

Preparing a financial budget鈥攂udgeted balance sheet

Use the following June actual ending balances and July 31, 2018, budgeted amounts for Omas to prepare a budgeted balance sheet for July 31, 2018.

a. June 30 Merchandise Inventory balance, \(17,770

b. July purchase of Merchandise Inventory, \)4,400, paid in cash

c. July payments of Accounts Payable, \(8,400

d. June 30 Accounts Payable balance, \)10,700

e. June 30 Furniture and Fixtures balance, \(34,100; Accumulated Depreciation balance, \)29,880

f. June 30 total stockholders鈥� equity balance, \(28,020

g. July Depreciation Expense, \)500

h. Cost of Goods Sold, 60% of sales

i. Other July expenses, including income tax, \(2,000, paid in cash

j. June 30 Cash balance, \)11,600

k. July budgeted sales, all on account, \(12,600

l. June 30 Accounts Receivable balance, \)5,130

m. July cash receipts from collections on account, $14,700

(Hint: It may be helpful to trace the effects of each transaction on the accounting equation to determine the ending balance of each account.)

Preparing a financial budget鈥攕chedule of cash payments

Barnes Company budgeted direct materials purchases of \(191,990 in January and \)138,610 in February. Assume Barnes pays for direct materials purchases 60% in the month of purchase and 40% in the month after purchase. The Accounts Payable balance on January 1 is $75,000. Prepare a schedule of cash payments for purchases for January and February. Round to the nearest dollar.

Using sensitivity analysis in budgeting

Refer to the Berry鈥檚 schedule of cash receipts from customers that you prepared in Short Exercise S22-9. Now assume that Berry鈥檚 sales are collected as follows:

60% in the month of the sale

20% in the month after the sale

18% two months after the sale

2% never collected

Prepare a revised schedule of cash receipts for January and February.

Preparing a financial budget鈥攕chedule of cash receipts

Victors expects total sales of \(702,000 for January and \)349,000 for February. Assume that Victor'ssales are collected as follows:

50% in the month of the sale

30% in the month after the sale

16% two months after the sale

4% never collected

November sales totaled \(388,000, and December sales were \)407,000. Prepare a schedule of cash receipts from customers for January and February. Round answers to the nearest dollar.
See all solutions

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