Question

ABC Company has the following historical collection pattern for its credit sales: 70% collected in month of sale 15% collected in the first month after sale 10% collected in the second month after sale 4% collected in the third month after sale 1% uncollectible Credit sales are for the last 6 months are as follows: July $60,000 August $70,000 September $80,000 October $90,000 November $100,000 December $85,000 the estimated total cash collections during october from accounts receivable would be

Answer 1

Ans.	Schedule of Cash Receipt in October
	Particulars	Amuont
	From July sales	$2,400
	From August sales	$7,000
	From September sales	$12,000
	From October sales	$63,000
	Total cash collection in October	$84,400
	Calculation of Cash collections:
		October
	From July sales	$60,000 * 4%
	From August sales	$70,000 * 10%
	From September sales	$80,000 * 15%
	From October sales	$90,000 * 70%