Question

Schedule of Cash Collections of Accounts Receivable

OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 30% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 20% pay their accounts in the month of sale, while the remaining 80% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows:

October	$126,000
November	158,000
December	231,000

The Accounts Receivable balance on September 30 was $84,000.

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

OfficeMart Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	$	$	$
September sales on account:
Collected in October
October sales on account:
Collected in October
Collected in November
November sales on account:
Collected in November
Collected in December
December sales on account:
Collected in December
Total cash receipts	$	$	$

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Horizon Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March	$111,900
April	105,200
May	95,700

Depreciation, insurance, and property taxes represent $24,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. 75% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule of cash payments for selling and administrative expenses for March, April, and May.

Horizon Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31
	March	April	May
March expenses:
Paid in March	$
Paid in April		$
April expenses:
Paid in April
Paid in May			$
May expenses:
Paid in May
Total cash payments	$	$	$

Answer 1

1
OfficeMart Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	37800	47400	69300
September sales on account:
Collected in October	84000
October sales on account:
Collected in October	17640
Collected in November		70560
November sales on account:
Collected in November		22120
Collected in December			88480
December sales on account:
Collected in December			32340
Total cash receipts	139440	140080	190120
2
Horizon Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31
	March	April	May
March expenses:
Paid in March	65925
Paid in April		21975
April expenses:
Paid in April		60900
Paid in May			20300
May expenses:
Paid in May			53775
Total cash payments	65925	82875	74075

Workings:
	October	November	December
Receipts from cash sales:
Cash sales	=126000*30%	=158000*30%	=231000*30%
September sales on account:
Collected in October	84000
October sales on account:
Collected in October	=126000*70%*20%
Collected in November		=126000*70%*80%
November sales on account:
Collected in November		=158000*70%*20%
Collected in December			=158000*70%*80%
December sales on account:
Collected in December			=231000*70%*20%
	March	April	May
March expenses:
Paid in March	=(111900-24000)*75%
Paid in April		=(111900-24000)*25%
April expenses:
Paid in April		=(105200-24000)*75%
Paid in May			=(105200-24000)*25%
May expenses:
Paid in May			=(95700-24000)*75%