Question

Lash Corporation has the following sales budget for the last half of 2000:

May $164,000 June $145,000
July $206,000 August $181,000
September 168,000 October 203,000
November 209,000 December 185,000

Sales are immediately due, however the cash collection of sales, historically, has been as follows: 55% of sales collected in the month of sale, 35% of sales collected in the month following the sale, 7% of sales collected in the second month following the sale, and 3% of sales are uncollectible.

Required:
a. What are the expected cash collections in September?
b. What is acciounts receivable at September 30?

Answer 1

Answer:

a. Expected cash collections in September is $170,170.

b. Accounts receivable at September 30, 2000 is $83,230.

Explanation:

a. What are the expected cash collections in September?

This can be determined as follows:

Lash Corporation

Expected Cash Collections in September 2000

Month of Sales                                    Amount ($)

July (7% * $206,000)                              14,420

August (35% * $181,000)                        63,350

September (55% * $168,000)                92,400  

Total expected cash collections        170,170

b. What is accounts receivable at September 30?  

This can be determined as follows:

Lash Corporation  

Expected Accounts Receivable at September 30, 2000  

Month of Sales                                           Amount ($)

August (7% * $181,000)                                 12,670

September ((35% + 7%) * $168,000)           70,560  

Accounts receivable                                   83,230