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Compute estimated cash collections on accounts receivable

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Question - Sales on account for the first two months of the current year are budgeted as follows:

Jan. $902,000

Feb. 901,000

All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days); collections on accounts receivable are typically made as follows:

Collections within the month of sale:

Within discount period 60%

After discount period 15

Collections within the month following sale:

Within discount period 15

After discount period 7

Returns, allowances, and uncollectibles 3

Total 100%

Compute the estimated cash collections on accounts receivable for the month of February.

Reference no: EM132189477

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