Question

Schedule of Cash Collections

PetJoy Wholesale Inc., a pet wholesale supplier, was organized on March 1, 2016. Projected sales for each of the first three months of operations are as follows:

March	$360,000
April	420,000
May	630,000

The company expects to sell 11% of its merchandise for cash. Of sales on account, 59% are expected to be collected in the month of the sale, 36% in the month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for March, April, and May.

PetJoy Wholesale Inc.
Schedule of Cash Collections
For the Three Months Ending May 31, 2016
	March	April	May
Receipts from cash sales:
Cash sales	$	$	$
March sales on account:
Collected in March
Collected in April
Collected in May
April sales on account:
Collected in April
Collected in May
May sales on account:
Collected in May
Total cash collected	$	$	$

Answer 1

PetJoy Wholesale Inc.

Schedule of Cash Collections

For the three months ending May 31, 2016

	March $	April $	May $
Receipts from cash sales
Cash sales (10% * current month's sales) note 1	39,600	46,200	69,300
March Month sales on account
Collected in March (Note 2) ($327,600*59%)	193,284
Collected in April ($327,600*36%)		117,936
Collected in May ($327,600*5%)			16,380
April Month sales on account
Collected in April ($382,200*59%)		225,498
Collected in May ($382,200*36%)			137,592
May Month sales on account
Collected in May ($573,300*59%)			338,247
Total cash collected	232,884	389,634	561,519

Note 1 Cash sales credit sales     

March - $360,000 * 11% = $39,600 $360,000* 91% = $327,600

April - $420,000 * 11% = $46,200 $420,000* 91% = $382,200

May - $630,000 * 11% = $69,300 $630,000* 91% = $573,300