Question

Jackson Bottle Yard, a recycling glass company, has supplied the following information in relation to their actual sales in 2019 and planned sales for the first quarter of 2020.

		Cash	Credit	Total
		$	$	$
2019 Actual Sales for	November	25,000	25,000	50,000
	December	35,000	40,000	75,000
2020 Estimated Sales for	January	15,000	20,000	35,000
	February	18,000	30,000	48,000
	March	22,000	40,000	62,000

Past records indicate that expected receipts collected from debtors will be:

               60 per cent in the month of sale

               40 per cent in the month following the sale

What is the projected cash inflow from accounts receivable (credit sales) in February?

Select one:

a. $26,000

b. $18,000

c. $48,000

d. none of these

e. $32,000

Answer 1

Answer:

Determination of projected cash inflow from accounts receivable (credit sales) in February:

Particulars	Amount
In respect of estimated credit sales in the month of January:
: Collected in the month of February ($20,000 x 40%)	$8,000
In respect of estimated credit sales in the month of February
: Collected in the month of February ($30,000 x 60%)	$18,000
Projected cash inflow from accounts receivable in February	$26,000

Accordingly, Option (a) i.e $26,000 is the corerct answer.