Question

Schedule of Cash Collections of Accounts Receivable

OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 20% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows:

October	$115,000
November	144,000
December	210,000

The Accounts Receivable balance on September 30 was $77,000.

Prepare a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar.

OfficeMart Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	$	$	$
September sales on account:
Collected in October
October sales on account:
Collected in October
Collected in November
November sales on account:
Collected in November
Collected in December
December sales on account:
Collected in December
Total cash receipts	$	$	$

Answer 1

• All working forms part of the answer
• Requirement completed

OfficeMart Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	$        23,000.00	$       28,800.00	$       42,000.00
September sales on account:
Collected in October	$        77,000.00
October sales on account:
Collected in October	$        23,000.00
Collected in November		$       69,000.00
November sales on account:
Collected in November		$       28,800.00
Collected in December			$       86,400.00
December sales on account:
Collected in December			$       42,000.00
Total cash receipts	$       123,000.00	$      126,600.00	$      170,400.00

• Working

OfficeMart Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	=115000 x 20%	=144000 x 20%	=210000 x 20%
September sales on account:
Collected in October	77000
October sales on account:
Collected in October	=115000 x 80% x 25%
Collected in November		=115000 x 80% x 75%
November sales on account:
Collected in November		=144000 x 80% x 25%
Collected in December			=144000 x 80% x 75%
December sales on account:
Collected in December			=210000 x 80% x 25%
Total cash receipts	Total cash receipts	Total cash receipts	Total cash receipts