Esplanade Company’s credit sales have the following historical pattern:
70% Collected in the month of sale
15% Collected in the first month after sale
10% Collected in the second month after sale
4% Collected in the third month after sale
1% Uncollectible
These sales on open account (credit sales) have been budgeted for the last six months in 2010:
|
July |
$60,000 |
|
August |
$70,000 |
|
September |
$80,000 |
|
October |
$90,000 |
|
November |
$100,000 |
|
December |
$85,000 |
1) Determine the estimated total cash collections from accounts receivable during
October 2010.
2) Compute the estimated total cash collections during the fourth quarter from credit sales of the fourth quarter.