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Accounts Receivable for Smithe and Wreston Company

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The following is the sales budget for the Smithe and Wreston Company for the first quarter of 20X1.

The aging of credit sales is:

30 percent collected in the month of sale

40 percent collected in the month after sale

The accounts receivable balance at the end of the previous quarter is $36,000; $30,000 of that amount is uncollected December sales.

a. Compute the sales for December.

b. Compute the cash collections from sales for each month from January through March.

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Solution Preview

The following is the sales budget for the Smithe and Wreston Company for the first quarter
of 20X1.
The aging of credit sales is
30 percent collected in the month of sale
40 percent collected in the month after sale
The accounts receivable balance at the end of the previous quarter is $36,000; $30,000 of
that amount is uncollected December sales.
a. Compute the sales for December.
b. Compute the cash collections from sales for each month from January through March.

First, we have to understand from the given information that 30% of credit sales ...

Solution Summary

This solution is comprised of written explanation on how to compute sales and cash collections as well as the necessary calcuations in an accompanying excel file.

$2.19