Question

J. Lo’s Clothiers has forecast credit sales for the fourth quarter of the year:

September (actual)	$	61,000
Fourth Quarter
October	$	51,000
November		46,000
December		71,000

Experience has shown that 35 percent of sales are collected in the month of sale, 65 percent are collected in the following month, and 0 percent are never collected.

Prepare a schedule of cash receipts for J. Lo’s Clothiers covering the fourth quarter (October through December).

Answer 1

Please find below :

Month	Sales	Cash Collection (exclusive of September sales	Cash Collection (inclusive of September sales
October	$        51,000	$                     17,850	$                  57,500
November	$        46,000	$                     49,250	$                  49,250
December	$        71,000	$                     54,750	$                  54,750
Total		$                   121,850	$                161,500
September Sales :	$        61,000
Note : For September sales collection will be done in October = 61000*65% = 39650
October month revised collection = 17850+39650 = 57500
October month sales	51000	Collected in October 35% of 51000		$ 17,850
		Collected in November 65% of 51000		$ 33,150
November month sales	46000	Collected in October 35% of 46000		$ 16,100
		Collected in November 65% of 46000		$ 29,900
December month sales	71000	Collected in December 35% of 51000		$ 24,850
		Collected in January 65% of 51000, not taken into consideration as it will in next calendar year	$ 46,150