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ACC 100 Lecture Notes - Lecture 2: Organization Of Ukrainian Nationalists, Subledger, Accounts Receivable

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apricotdog292
7 Dec 2017
School
Ryerson University
Department
Accounting
Course
ACC 100
Professor
Albert Ciorma

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Document Summary

When a business sells on credit it records an account receivable on its balance sheet as a current asset and revenue on the income statement. The issue with the account receivable that a business records on the balance sheet is that some of those accounts receivable may never be collected in cash. This means that there is a cost to selling on credit and the main cost is that some of the customers will never pay. In order to report the amount of accounts receivable that a business expects to collected in the future, a business has to igure out the amount of accounts receivable they won"t collect! The problem is that businesses don"t know which customers won"t pay in the future. Think about it: if a business knew which of their customers won"t pay in the future they simply wouldn"t sell to them!!! Instead, a business knows from past history that some customers won"t pay.

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Related Questions

Schedule of Cash Collections of Accounts Receivable Office WorldInc. has "cash and carry" customers and credit customers. OfficeWorld estimates that 20% of monthly sales are to cash customers,while the remaining sales are to credit customers. Of the creditcustomers, 25% pay their accounts in the month of sale, while theremaining 75% pay their accounts in the month following the monthof sale. Projected sales for the next three months of 20Y4 are asfollows: August $120,000 September 150,000 October 220,000 TheAccounts Receivable balance on July 31, 20Y4, was $80,000.

Prepare a schedule of cash collections from sales for August,September, and October. Office World Inc. Schedule of Collectionsfrom Sales For the Three Months Ending October 31, 20Y4 AugustSeptember October

Receipts from cash sales: Cash sales $ 24000 $ 30000 $ 44000

July sales on account:

Collected in August

August sales on account:

Collected in August

Collected in September

September sales on account:

Collected in September

Collected in October

October sales on account:

Collected in October

Total cash receipts $ $ $

Office World Inc. has "cash and carry" customers and creditcustomers. Office World estimates that 25% of monthly sales are tocash customers, while the remaining sales are to credit customers.Of the credit customers, 20% pay their accounts in the month ofsale, while the remaining 80% pay their accounts in the monthfollowing the month of sale. Projected sales for the next threemonths of 2016 are as follows:

August $129,000
September 161,000
October 236,000

The Accounts Receivable balance on July 31, 2016, was$86,000.

Prepare a schedule of cash collections from sales for August,September, and October. Round all calculations to the nearest wholedollar.

Office World Inc.
Schedule of Collections from Sales
For the Three Months Ending October 31, 2016
August September October
Receipts from cash sales:
Cash sales $ $ $
July sales on account:
Collected in August
August sales on account:
Collected in August
Collected in September
September sales on account:
Collected in September
Collected in October
October sales on account:
Collected in October
Total cash receipts $ $ $

OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 25% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows: October $122,000 November 153,000 December 223,000 The Accounts Receivable balance on September 30 was $82,000. Prepare a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar.