Question

Minot Corporation is preparing its cash budget for August. The following information is available concerning its accounts receivable:

Estimated credit sales for August	$	200,000
Actual credit sales for July	$	151,000
Estimated collections in August for credit sales in August		25	%
Estimated collections in August for credit sales in July		70	%
Estimated collections in August for credit sales prior to July	$	16,000
Estimated write-offs in August for uncollectible credit sales	$	8,000
Estimated provision for bad debts in August for credit sales in August	$	7,000

Required:

What is the estimated amount of cash receipts from accounts receivable collections in August?

Answer 1

Answer: $169700

Explanation:

Estimated amount of cash receipts from accounts receivable collections in August = Estimated collections in August for credit sales in August + Estimated collections in August for credit sales in July + Estimated collections in August for credit sales prior to July

Estimated amount of cash receipts from accounts receivable collections in August = (200,000 - 8000)*25% + $151000*70% + $16000

Estimated amount of cash receipts from accounts receivable collections in August = $48000 + $105700 + $16000

=$169700