Question

(Pro forma accounts receivable balance calculation​) ​Jimmie's micro brewery is located in downtown​ Ruston, Louisiana in a restored section of the old Ford dealership. Jimmie sells his beer both to retail customers that visit his brewery and also distributes his line of craft beers through M. L. Keith Food Distributors.​ Jimmie's wholesale distributor purchases his beer on credit which amounts to about​ 50% of the​ brewery's total sales. Firm sales were roughly evenly split between credit and cash​ sales, with 25 percent of the credit sales collected in the month after the sale and the remainder 2 months after the sale. Historical and projected sales for the brewing company are given​ here:

MONTH   SALES   MONTH   SALES
January   65,000   March   75,000
February   70,000   April (projected)   66,000

a. Under these​ circumstances, what should the balance in accounts receivable be at the end of​ April?

b. How much cash did​ Jimmie's realize during April from sales and​ collections?

Answer 1

Ans 1 Particulars Sales Jan $65,000 Feb $70,000 Mar $75,000 Apr $66,000 Cash Sales Credit Sales $32,500 $35,000 $37,500 $33,000 ($65000 x 50%] [$70000 x 50%] [$75000 x 50%] [$66000 x 50%] $32,500 $35,000 $37,500 $33,000 ($65000 x 50%] [$70000 x 50%] [$75000 x 50%] ($66000 x 50%] $32,500 $59,375 $88,125 $32,500 $35,000 $37,500 $33,000 Beginning A/R Balance (A) Add: Sales (B) Less: Credit Sales Collection Jan Sales Collection $8,125 ($32500 x 25%] Feb Sales Collection $24,375 ($32500 x 75%] $8,750 [$35000 x 25%] $9,375 ($37500 x 25%] $8,750 $33,750 $88,125 $87,375 Mar Sales Collection Total Collection (C) $0 $8,125 Ending A/R Balance (A) +(B)-(C) $32,500 $59,375 The balance in accounts receivable be at the end of April is $87375 Ans 2 Cash Sales $33,000 Add: Credit sales collection $33,750 Total Cash Collection in April $66,750 Jimmie's realizes $66750 cash during April from sales and collections