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

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.

#### Solution Summary

The solution explains each problem with clear responses which show how to calculate the answers.

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