Question

Simpson Glove Company has made the following sales projections for the next six months. All sales are credit sales. March $41,000 June $47,000 April 50,000 July 58,000 May 32,000 August 62,000 Sales in January and February were $41,000 and $39,000, respectively. Experience has shown that of total sales receipts 10 percent are uncollectible, 40 percent are collected in the month of sale, 30 percent are collected in the following month, and 20 percent are collected two months after sale. Prepare a monthly cash receipts schedule for the firm for March through August.

Answer 1

Sales on Jan = 41000

Sales on Feb = 39000

Month	March	April	May	June	July	August
Sales for current month	41000	50000	32000	47000	58000	62000
Amount collected from current month sales (40%) ----(A)	16400	20000	12800	18800	23200	24800
Amount collected from previous month sales (30%) ---- (B)	11700	12300	15000	9600	14100	17400
Amount collected from 2 months of previous sale (20%) ------ (C)	8200	7800	8200	10000	6400	9400
Total Cash Reciept (A+B+C)	36,300	40,100	36,000	38,400	43,700	51,600