Question

Getty Company expects sales for the first three months of next year to be $195,000, $265,000 and $315,000, respectively. Getty expects 50 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows: 10 percent in the month of the sale and 90 percent in the following month. Compute a schedule of Getty’s cash receipts for the months of February and March.

Answer 1

Particulars	January	February	March
Total sales	$             195,000.00	$                           265,000.00	$                       315,000.00
Cash sales	$               97,500.00	$                           132,500.00	$                       157,500.00
(50% of sales)
Credit sales	$               97,500.00	$                           132,500.00	$                       157,500.00
Collection from Debtors:
January		$                             87,750.00
		(90% of $ 97500)
February		$                             13,250.00	$                       119,250.00
		(10% of $ 132500)	(90% of $ 132500)
March			$                         15,750.00
			(10% of $ 157500)
Total Cash Receipts		$                           233,500.00	$                       292,500.00
		($ 132500+$ 87750+$ 13250)	($ 157500+$ 119250+$15750)