Question

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

Estimated credit sales for April $198,000
Actual credit sales for March $148,500
Estimated collections in April for credit sales prior to March $15,840
Estimated write-offs in April for uncollectible credit sales $7,920
Estimated provision for bad debts in April for credit sales in April $6,930
Estimated collections in April for credit sales in April 30%
Estimated collections in April for credit sales in March 65%

a. What is the estimated amount of cash receipts from accounts receivable collections in April?

Answer 1

The estimated cash receipts from accounts receivable collections in April for Hackett Produce Supply is $92,444, after considering collections from previous sales, current month sales, write-offs, and provision for bad debts.

Step-by-step explanation:

The estimated cash receipts from accounts receivable collections in April for Hackett Produce Supply is $92,444. Here's how it's calculated:

• Collection from March's credit sales: $148,500 x 65% = $96,525
• Collection from sales prior to March: $15,840
• Collection from April's credit sales: $198,000 x 30% = $59,400
• Total estimated collections: $96,525 + $15,840 + $59,400 = $171,765
• Less: Estimated write-offs: $7,920
• Less: Provision for bad debts: $6,930
• Net estimated cash receipts: $171,765 - $7,920 - $6,930 = $156,915

The adjustment for write-offs and provision for bad debts is essential in determining the true cash receipts expected.