Sales on account for the first two months of the current yearare budgeted as follows:
Jan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$800,000
Feb. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .880,000
All sales are made on terms of 2/10, n/30 (2% discount if paidin 10 days, full amount by 30 days); collections on accountsreceivable are typically made as follows:
Collections within the month of sale:
Within discount period . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 70%
After discount period . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 10
Collections within the month following sale:
Within discount period . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 12
After discount period . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 6
Returns, allowances, and uncollectibles . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 100%
Compute the estimated cash collections on accountsreceivable for the month of February.
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