Question

The Ridgewood Antique Mall budgeted credit sales in the first quarter of 2018 to be as follows:

January		$141,000
February		150,000
March		160,000

Credit sales in December 2017 are expected to be $194,000. The company expects to collect 95 percent of a month’s sales in the month of sale and 5 percent in the following month.

Estimate cash receipts for each month of the first quarter of 2018.

Collection of credit sales	January		February		March
Collection of December sales	$		$		$
Collection of January sales
Collection of February sales
Collection of March sales
	$		$		$

Answer 1

	Percentage	Month	December 2017	January 2018	February 2018	March 2018
a)	100	Total Sales	$ 3,880,000	$ 2,820,000	$ 3,000,000	$ 3,200,000
b)	5	Credit Sales	$ 194,000	$ 141,000	$ 150,000	$ 160,000
c)	95	Cash Sales	$ 3,686,000	$ 2,679,000	$ 2,850,000	$ 3,040,000
d)		CashCollection of prevoius month Credit sales	-	$ 194,000	$ 141,000	$ 150,000
(c+d)		Total Cash Collection	$ 3,686,000	$2,873,000	$2,991,000	$3,190,000
		Collection of December sales		$ 3,686,000
		Collection of January sales		$2,873,000
		Collection of February sales		$2,991,000
		Collection of March sales		$3,190,000
		Note:
		In question Credit sales is given for Dcember	Amount	Percent
		$ 194,000	5
		Actual Sales	(?)	100
		Will Do Cross Multiplication
		So will Get Actual Sales			$ 3,880,000	($ 194,000 *100/ 5)
		Cash sales= 95% of Total Sales			$ 3,686,000	$ 3,880,000 * 0.95 )
		Same task will do for each month