Asked by Kartik Bhatia on May 27, 2024
Verified
The cash collections expected in September from accounts receivable are estimated to be
A) $223,600
B) $145,600
C) $182,000
D) $168,000
Accounts Receivable
Represents money owed to a business by its customers for goods or services delivered but not yet paid for, usually recoverable within a short period, like 30, 60, or 90 days.
Merchandise
Goods that are bought and sold within the retail industry.
Sales on Account
Transactions where goods or services are sold with the agreement that payment will be made at a later date, creating an account receivable.
- Predict cash flow outcomes by analyzing sales forecasts and expense estimates.
- Comprehend the repercussions of credit sales policies and collection strategies on cash flow.
Verified Answer
SR
Shannon RobinsonMay 30, 2024
Final Answer :
B
Explanation :
For September, the cash collections from accounts receivable are only from sales on account, as the cash sales are not part of accounts receivable collections. The total sales for September are $260,000. Cash sales (30% of total sales) are $260,000 * 30% = $78,000, leaving $182,000 ($260,000 - $78,000) as sales on account. Of these sales on account, 80% are expected to be collected in the same month (September), which amounts to $182,000 * 80% = $145,600.
Learning Objectives
- Predict cash flow outcomes by analyzing sales forecasts and expense estimates.
- Comprehend the repercussions of credit sales policies and collection strategies on cash flow.