Question

Assume a merchandising company provides the following information from its master budget for the month of May:

Sales $ 118,000
Cost of goods sold $ 94,000
Selling and administrative expenses $ 28,000
Accounts receivable, May 1st $ 17,000
Accounts receivable, May 31st $ 23,000

If all of the company’s sales are on account, what is the amount of cash collections from customers included in the cash budget for May?

Answer 1

Answer:$129,000

Step-by-step explanation:

Beginning accounts receivable: $17,000

Ending accounts receivable: $23,000

Increase in accounts receivable: $23,000 - $17,000 = $6,000

Cash collections from customers = Credit sales - Increase in accounts receivable + Beginning accounts receivable

Cash collections from customers = $118,000 - $6,000 + $17,000

Cash collections from customers = $129,000