Share
Explore BrainMass

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.

$2.19