Question

Schedule of Cash Collections of Accounts Receivable

Pet Supplies Inc., a pet wholesale supplier, was organized on January 1. Projected sales for each of the first three months of operations are as follows:

January	$300,000
February	500,000
March	750,000

All sales are on account. Seventy-five percent of sales are expected to be collected in the month of the sale, 20% 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 January, February, and March. Enter all amounts as positive numbers.

Pet Supplies Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending March 31
	January	February	March
January sales on account:
Collected in January	$fill in the blank 1
Collected in February		$fill in the blank 2
Collected in March			$fill in the blank 3
February sales on account:
Collected in February		fill in the blank 4
Collected in March			fill in the blank 5
March sales on account:
Collected in March			fill in the blank 6
Total cash collected	$fill in the blank 7	$fill in the blank	fill

Answer 1

Schedule of cash collections from sales

For the 3 months Ending March

	January	February	March
January sales on account:
Collected in january	$225,000(1)
Collected in february		$60,000(2)
Collected in march			$15,000(3)
February sales on account:
Collected in february		$375,000(4)
Collected in march			$100,000(5)
March sales on account:
Colected in march			$562,500(6)
Total cash collected	$225,000(7)	$435,000	$677,500

Working note:

	January	February	March
January sales on account:
Collected in january	$300,000*75% = $225,000
Collected in february		$300,000*20% = $60,000
Collected in march			$300,000*5% = $15,000
February sales on account:
Collected in february		$500,000*75% = $375,000
Collected in march			$500,000*20% = $100,000
March sales on account:
Collected in march			$750,000*75% = $562,500
Total cash collected	$225,000	$60,000 + $375,000 = $435,000	$15,000 + $100,000 + $562,500 = $677,500