Question

Hackett Produce Supply is preparing its cash budget for April. The following information is available:

Estimated credit sales for April $ 298,000
Actual credit sales for March $ 163,500
Estimated collections in April for credit sales prior to March $ 15,000
Estimated write-offs in April for uncollectible credit sales $ 12,920
Estimated provision for bad debts in April for credit sales in April $ 11,930
Estimated collections in April for credit sales in April 25%
Estimated collections in April for credit sales in March 70%

Required:
What is the estimated amount of cash receipts from accounts receivable collections in April?
Estimated cash receipts: ?

Answer 1

The estimated cash receipts from accounts receivable collections for Hackett Produce Supply in April are $203,950, a figure derived from collections on sales prior to March, March sales, and April sales, without considering write-offs or provision for bad debts.

Step-by-step explanation:

The estimated amount of cash receipts from accounts receivable collections for Hackett Produce Supply in April comprises of collections for credit sales prior to March, collections for credit sales in March, and collections for credit sales in April. To calculate this, we use the following information:

• Estimated collections in April for credit sales prior to March: $15,000
• Estimated collections in April for credit sales in March ($163,500 * 70%): $114,450
• Estimated collections in April for credit sales in April ($298,000 * 25%): $74,500

Therefore, the total estimated cash receipts from accounts receivable collections in April is:

$15,000 (prior sales) + $114,450 (March sales) + $74,500 (April sales) = $203,950.

This calculation does not include estimated write-offs or provision for bad debts, as these represent anticipated losses rather than cash transactions.