Question

Schedule of Cash Collections of Accounts Receivable

Office World Inc. has "cash and carry" customers and credit customers. Office World estimates that 25% 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 of 2016 are as follows:

August	$114,000
September	143,000
October	209,000

The Accounts Receivable balance on July 31, 2016, was $76,000.

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

Office World Inc.
Schedule of Collections from Sales
For the Three Months Ending October 31, 2016
	August	September	October
Receipts from cash sales:
Cash sales	$	$	$
July sales on account:
Collected in August
August sales on account:
Collected in August
Collected in September
September sales on account:
Collected in September
Collected in October
October sales on account:
Collected in October
Total cash receipts	$	$	$

Answer 1

The cash colloection will be for cash sales and on account sales:, for cash sales it is received immediately,

For On accounts sales -The cash collection is 25% of the current month sales and 75 % of the previous month sales.

I have provided explanative format for your reference:

Office World Inc.
Schedule of Collections from Sales
For the Three Months Ending October 31, 2016
	August	September	October
Receipts from cash sales:
Projected sales for the month (A)	114000	143000	209000
On Account sales (Remaining 75%) { (A) * 75%)} (B)	85500	107250	156750
Cash sales (25% of total sales) { (A) * 25%)}   ( C )	28500	35750	52250
25% of on account sale's Cash is collected in the month of sale i.e {(B) *75%}   ( D)	21375	26812.5	39187.5
Remaining Credit sales is to be collected from Previous month sale (E)	76000	64125	80437.5
	( July accounts receivable)	(85500*75%)	(107250*75%)
Total cash receipts ( C + D + E)	125875	126687.5	171875

Actual format as required:.

Office World Inc.
Schedule of Collections from Sales
For the Three Months Ending October 31, 2016
	August	September	October
Receipts from cash sales:
Cash sales	28500	35750	52250
July sales on account:	101333
Collected in August ( 101333 *75% ) Its accounts receivable given we can take that also	76000
August sales on account:	85500
Collected in August	21375
Collected in September		64125
September sales on account:		107250
Collected in September		26812.5
Collected in October			80437.5
October sales on account:			156750
Collected in October			39187.5
Total cash receipts	125875	126687.5	171875