Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 9, Problem 24E
Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales.
70 percent collected in the month of sale.
15 percent collected in the first month after sale.
10 percent collected in the second month after sale.
4 percent collected in the third month after sale.
1 percent uncollectible.
The sales on account have been budgeted for the last seven months as follows:
Required:
- 1. Compute the estimated total cash collections during October from credit sales.
- 2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.
- 3. Build a spreadsheet: Construct an Excel spreadsheet to solve both of the preceding requirements. Show how the solution will change if the following information changes: sales in June and July were $50,000 and $65,000, respectively.
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Students have asked these similar questions
Emerald Service anticipates the following sales revenue over
a five-month period
Its collection history indicates that credit sales are
collected as follows
E (Click the icon to view the sales data )
The company's sales are 40% cash and 60% credit
O (Click the icon to view the collections data)
How much cash will be collected in January? In
February? In March? For the quarter in total?
Complete the cash budget to determine how much cash will be collected in January, February, March and for the quarter in
total. (Round your answers to the nearest whole dollar)
Emerald Service
Cash Collections Budget
For the Months of January through March
January
Cash sales
6,080
Collection of credit sales
25% Month of sale
2,280
50% Month after
15% Two months after
Total cash collections
Cloudy Company had the following historical collection pattern for its credit sales:
70% collected in the month of sale
12% collected in the first month after month of sale
10% collected in the second month after month of sale
5% collected in the third month after month of sale
3% uncollectible
The sales on open account (credit sales) have been budgeted for the last six months of the year as
shown below:
July
August
September
October
November
December
The estimated cash collection by Cloudy Company during September from credit sales in July,
August, and September is:
Multiple Choice
$83,840.
$100,160.
$90,880.
$ 92,000
$ 104,000
$ 116,000
$ 128,000
$ 140,000
$ 122,000
$64,400.
West Company budgeted the following credit sales during the current year: September, $75,000; October, $108,000; November, $90,000; December, $96,000.Experience has shown that cash from the credit sales is received as follows:10% in the month of sale, 50% in the first month after sale, 35% in the second month after sale, and 5% is uncollectible. All collections in the month of sales are subject to 2 percent cash discount.Â
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Required:Â How much cash can West Company expect to collect in November?
Chapter 9 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 9 - Explain how a budget facilitates communication and...Ch. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - What is meant by the term operational budgets?...Ch. 9 - How does activity-based budgeting explain the...Ch. 9 - Prob. 8RQCh. 9 - Give three examples of how the City of Boston...Ch. 9 - Describe the role of a budget director.
Ch. 9 - What is the purpose of a budget manual?Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - Define the term budgetary slack, and briefly...Ch. 9 - How can an organization help to reduce the...Ch. 9 - Prob. 16RQCh. 9 - Discuss this comment by a small-town bank...Ch. 9 - List the steps you would go through in developing...Ch. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Fill in the missing amounts in the following...Ch. 9 - Bodin Company budgets on an annual basis. The...Ch. 9 - Coyote Loco, Inc., a distributor of salsa, has the...Ch. 9 - Greener Grass Fertilizer Company plans to sell...Ch. 9 - The following information is from Tejas...Ch. 9 - Tanya Williams is the new accounts manager at East...Ch. 9 - Sound Investments, Inc. is a large retailer of...Ch. 9 - Handy Hardware is a retail hardware store....Ch. 9 - Prob. 30ECh. 9 - Spiffy Shades Corporation manufactures artistic...Ch. 9 - Western State University (WSU) is preparing its...Ch. 9 - Mary and Kay, Inc., a distributor of cosmetics...Ch. 9 - Prob. 34PCh. 9 - Alpha-Tech, a rapidly growing distributor of...Ch. 9 - Prob. 36PCh. 9 - Scholastic Furniture, Inc. manufactures a variety...Ch. 9 - Prob. 38PCh. 9 - Vista Electronics, Inc. manufactures two different...Ch. 9 - Prob. 40PCh. 9 - Toronto Business Associates, a division of Maple...Ch. 9 - FreshPak Corporation manufactures two types of...Ch. 9 - Healthful Foods Inc., a manufacturer of breakfast...Ch. 9 - We really need to get this new material-handling...Ch. 9 - City Racquetball Club (CRC) offers racquetball and...Ch. 9 - Patricia Eklund, controller in the division of...Ch. 9 - Jeffrey Vaughn, president of Frame-It Company, was...
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- Cash collections for Renew Lights found that 65% of sales were collected in the month of sale, 25% was collected the month after the sale, and 10% was collected the second month after the sale. Given the sales shown, how much cash will be collected in March and April?arrow_forwardMy Aunts Closet Store collects 60% of its accounts receivable in the month of sale and 35% in the month after the sale. Given the following sales, how much cash will be collected in March?arrow_forwardHalifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?arrow_forward
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