Finch Pointers Corporation expects to begin operations on January 1, Year 1; it will operate as...

Finch Pointers Corporation expects to begin operations on January 1, Year 1; it will operate as a specialty sales company that sells laser pointers over the Internet. Finch expects sales in January Year 1 to total $370,000 and to increase 10 percent per month in February and March. All sales are on account. Finch expects to collect 65 percent of accounts receivable in the month of sale, 20 percent in the month following the sale, and 15 percent in the second month following the sale.

c, prepare a cash receipts schedule for the first quarter of year 1

d. determine the amount of accounts receivable as of march 31, year 1

Expert Solution

Answer:

Preparation of a cash receipts schedule for the first quarter of year 1:

Particulars	January	February	March
In respect of sales for the month of January:
: Collected in the month of January ($370,000 x 65%)	$240,500
: Collected in the month of February ($370,0000 x 20%)		$74,000
: Collected in the month of march ($370,000 x 15%)			$55,500
In respect of sales for the month of February:
: Collected in the month of February ($407,000 x 65%)		$264,550
: Collected in the month of March ($407,000 x 20%)			$81,400
In respect of credit sales for the month of March:
: Collected in the month of March ($447,700 x 65%)			$291,005
Total cash collections	$240,500	$338,550	$427,905

Determination of the amount of accounts receivable as of march 31, year 1:

Particulars	Amount
Sales for the month of January	$370,000
Sales for the month of February {$370,000 + ($370,000 x 10%)}	$407,000
Sales for the month of March {$407,000 + ($407,000 x 10%)	$447,700
Total sales made in quarter -1	$1,224,700
Less: Cash Collected for the sales made in quarter-1 ($240,500 + $338,500 + $427,905)	($1,006,955)
Balance amount of accounts receivable as of March 31	$217,745

ekkarill92 answered 2 years ago

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