Q4TI - Horngren'S Financial And Managerial Accounting

Question

Question: Meeks Company has the following sales for the first quarter of 2019:         

                                                                       January         February           March                      Cash sales                                                     \( 5,000               \) 5,500          \( 5,250 Sales on account                                            15,000                 14,000        14,500 Total sales                                                       \) 20,000            \( 19,500       \) 19,750 Sales on account are collected the month after the sale. The Accounts Receivable balance on January 1 is $12,500, the amount of December’s sales on account. Calculate the cash receipts from customers for the first three months of 2019.

Step-by-Step Solution

Answer

Answer

 

The cash receipts from customers in January, February, and March is $17,500, $20,500, and $19,250, respectively.

Step 1: Meaning of Accounts Receivable

Accounts receivable refers to the amount that a business will receive from its customers against which already credit sales are made.

Step 2: Statement showing the cash receipts from customers

Particulars	January	February	March
Account receivable balance 1 January	$12,500
Cash sales	$5,000	$5,500	$5,250
Credit sales	-	$15,000	$14,000
Total cash receipts from customers	$17,500	$20,500	$19,250

Note: The amount of 2018 December’s sales will be received in January 2019.