Question

James Company expects the following sales in the next few months:

                        Month                         Units               Selling Price

                        July                              50,000             $ 8.10

                        August                        80,000             $ 8.10

                        September                   40,000             $ 8.60

                        October                       30,000             $ 8.60

James expects to collect 60 % of sales in the month of sale, 30 % in the following month, 5 % in the next month, with 5 % remaining uncollected.

Required:

Prepare a schedule of cash receipts for September and October.

Answer 1

Month		July	August	Setpetember	October		Total
Units		50,000	80,000	40,000	30,000
Selling Price		$               8.10	$               8.10	$               8.60	$               8.60
Total Sales		$       4,05,000	$       6,48,000	$       3,44,000	$       2,58,000
Collection of Sales in:
July		$       2,43,000					$   2,43,000
August		$       1,21,500	$       3,88,800				$   5,10,300
September		$           20,250	$       1,94,400	$       2,06,400			$   4,21,050
October			$           32,400	$       1,03,200	$       1,54,800		$   2,90,400
Total		$       3,84,750	$       6,15,600	$       3,09,600	$       1,54,800		$ 14,64,750
Working:
July Sales collection:
In July	=	$       4,05,000	*	60%	=		$   2,43,000
In August	=	$       4,05,000	*	30%	=		$   1,21,500
In September	=	$       4,05,000	*	5%	=		$       20,250
Similary, all month's sales are collected.