Question

Yeopay Plumbing Supply accepts bank credit cards and offers established plumbers charge accounts with terms of 1/eom, n/45. Yeopay’s experience is that 25% of its sales are for cash and bank credit cards. The remaining 75% are on credit. Of the cash sales, 40% pay cash and the remaining 60% pay with bank credit cards. Yeopay receives payments from the bank on credit card sales at the end of the day. However, Yeopay has to pay 3% for these services. An aging schedule for accounts receivable shows the following pattern on credit sales:

20	%	pay in the month of sale.
50	%	pay in the first month following the month of sale.
15	%	pay in the second month following the month of sale.
12	%	pay in the third month following the month of sale.
3	%	are never collected.

All accounts not paid by the end of the second month following the month of sale are considered overdue and are subject to a 2% monthly late charge. Yeopay has prepared the following sales forecasts:

June	$	60,000
July		80,000
August		90,000
September		96,000
October		88,000

Required:

1a.	Prepare a schedule of cash receipts for September. Cash receipts for September should total $86,082. (All percentage answers should be entered as whole numbers. If "Collection %" is 100 percent for a particular period, leave the corresponding cell blank.)

           

1b.	Prepare a schedule of cash receipts for October. Cash receipts for September should total $88,141. (All percentage answers should be entered as whole numbers. If "Collection %" is 100 percent for a particular period, leave the corresponding cell blank.)

          

Answer 1

cash receipts

we will fill data from information given

*1% discount for same month payament

*2% penalty if paid in third month after sales

*3% credit card charges deduction

cash receipts for September	Total sales %	Sales %	payment %	Collection %	Cash receipts
Cash sales	$96,000	25%	40%	100%	$9,600 [96,000*25%*40%*100%]
Credit card sales	$96,000	25%	60%	97% (after bank charges)	$13,968 [$96,000*25%*60%*97%]
collcetion of accounts receivable
September sales	$96,000	75%	20%	99% (1% discount)	$14,256 [$96,000*75%*0%*99%]
August sales	$90,000	75%	50%	100%	$33,750 [$90,000*75%*50%*100%]
July sales	$80,000	75%	15%	100%	$9,000 [$80,000*75%*15%*100%]
june sales	$60,000	75%	12%	102% (monthky charge)	$5,508 [$60,000*75%*12%*102%]
Total cash receipts					$86,082

cash receipts for October	Total sales %	Sales %	payment %	Collection %	Cash receipts
Cash sales	$88,000	25%	40%	100%	$8,800
Credit card sales	$88,000	25%	60%	97% (after bank charges)	$12,804
collcetion of accounts receivable
October sales	$88,000	75%	20%	99% (1% discount)	$13,068
Septmeber sales	$96,000	75%	50%	100%	$36,000
August sales	$90,000	75%	15%	100%	$10,125
july sales	$80,000	75%	12%	102% (monthky charge)	$7,344
Total cash receipts					$88,141 [$8,800+12,804+13,068+36,000+10,125+7,344]