Question

Moore Inc. had the following historical pattern for its credit sales: 70% collected in the month of sale 20% collected in the firs month after sale 8% collected in the second month after sale 2% uncollectible The sales on open account (credit sales) have been budgeted for the last four months of the year as shown below: September $12,000 October $13,000 November $10,000 December $12,000 Required: a. The estimated total cash collections by the company during December from accounts receivable is: b. The estimated total cash collections by the company during November from collection of accounts receivable is: c. The estimated total cash collections by the company during October from accounts receivable is:

Answer 1

Requirement a):

Collections during December:
From December sales ($12,000 x 70%)	$ 8,400
From November sales ($10,000 x 20%)	$ 2,000
From October sales ($13,000 x 8%)	$ 1,040
Total collections	$ 11,440

Requirement b):

Collections during November:
From November Sales ($10,000 x 70%)	$ 7,000
From October sales ($13,000 x 20%)	$ 2,600
From September sales ($12,000 x 8%)	$ 960
Total collections	$ 10,560

Requirement c):

Collections during October:
From October sales ($13,000 x 70%)	$ 9,100
From September sales ($12,000 x 20%)	$ 2,400
Total collections	$ 11,500

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