Question

# Minot Corporation is preparing its cash budget for August. The following information is available concerning its...

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?

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

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