Question

Jane 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

Jane 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. Prepare a schedule of cash receipts for September and October.

Answer 1

Answer)

Calculation of cash receipts in the month of September and October

(Amount in $)

Particulars	September	October
Collection from sales for the month of July	20,250	-
Collection from sales for the month of August	194,400	32,400
Collection from sales for the month of September	206,400	103,200
Collection from sales in the month of October	-	154,800
Total cash collection	421,050	290,400

Notes:

Collection from Sales of the month of July in the month of:

September = $ 405,000 x 5%

= $ 20,250

Collection from sales of the month of August in the month of:

September = $ 648,000 x 30%

= $ 194,400

October = $ 648,000 x 5%

= $ 32,400

Collection from sales of the month of September in the month of:

September = $ 344,000 x 60%

= $ 206,400

October = $ 344,000 x 30%

= $ 103,200

Collection from sales of the month of October in the month of:

October = $ 258,000 x 60%

= $ 154,800

Working note:

Calculation of monthly sales:

Month	units	selling price	Total sales
July	50,000	$ 8.10	$ 405,000
August	80,000	$ 8.10	$ 648,000
September	40,000	$ 8.60	$ 344,000
October	30,000	$ 8.60	$ 258,000