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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