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    Fresh Co. estimated cash receipts; Planet Corp cash collected; Zurich cash flow

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    E4 - 8
    Determining cash collections on account

    Fresh Company is preparing its cash results for the month of May. The following information is available concerning its account receivable:

    Estimated credit sales for May $ 200,000
    Actual credit sales for April $ 150,000
    Estimated collection in May
    for credit sales in May 20%
    Estimated collection in May
    for credit sales in April 70%
    Estimated collections in May
    for credit sales prior to April $12,000
    Estimated write-offs in May
    for uncollectible credit sales $ 8,000
    Estimated bad debts expense in May
    for credit sales in May $ 7,000

    Required:
    What are the estimated cash receipts from account receivable collections in May?

    E4 - 11
    Determining cash collections on account

    The following information was taken from the 2005 financial statement of Planet Corporation:

    Accounts receivable, January 1, 2005 $ 21,600
    Accounts receivable, December 31, 2005 $ 30,400
    Sales on accounts and cash sales $ 438,000
    Uncollectible accounts (bad debts) $ 1,000

    No accounts receivable were written off or recovered during the year.

    Required:
    Determine the cash collected from customers by Planet Corporation in 2005.

    E4 - 14
    Determining cash from operations and reconciling with accrual net income

    The following information was taken from the 2005 financial statements of Zurich Corporation, a maker of Swiss watches:

    Net Income $ (200,000)
    Depreciation $ 50,000
    Increase (decrease) in
    Accounts receivable $ (140,000)
    Inventories $ 25,000
    Other current assets $ 10,000
    Accounts payable $ 12,000
    Accrued payables $ (25,000)
    Interest payable $ 50,000

    Required:

    1. Calculate Zurich's cash flow from operating activities for 2005
    2. Explain the reasons for the difference between the firm's net income and its cash flow from operating activities in 2005.

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