Question

Company projects the following sales for the first three months of the year: $15,800 in January; $12,200 in February; and $11,100 in March. The company expects 80%of the sales to be cash and the remainder on account. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round to the nearest dollar. Prepare a revised schedule of cash receipts if receipts from sales on account are 70%in the month of the sale, 20% in the month following the sale, and 10% in the second month following the sale. What is the balance in Accounts Receivable on March 31? (Leave unused and zero balance account cells blank, do not enter "0".)

Answer 1

1)	a.
		Schedule of Expected Cash Collection
							January	February	March	Total
		Sales					$       15,800	$     12,200	$ 11,100	$ 39,100
		Cash Sales				a	$       12,640	$       9,760	$    8,880	$ 31,280
		Sales on accounts					$         3,160	$       2,440	$    2,220
		Collection of Sales on account:
		January's Sales					$         1,580	$       1,580
		February's Sales						$       1,220	$    1,220
		March's Sales							$    1,110
		Total Collection of Sales on account				b	$         1,580	$       2,800	$    2,330	$    6,710
		Total Collection from Sales				a+b	$       14,220	$     12,560	$ 11,210	$ 37,990
	b.
		Balance in Accounts receivable on March 31					=	March Sales x 50% to be received in following moths
							=	$       2,220	x	50%
							=	$       1,110
2)
	a.
		Schedule of Expected Cash Collection
							January	February	March	Total
		Sales					$       15,800	$     12,200	$ 11,100	$ 39,100
		Cash Sales				a	$       12,640	$       9,760	$    8,880	$ 31,280
		Sales on accounts					$         3,160	$       2,440	$    2,220
		Collection of Sales on account:
		January's Sales					$         2,212	$ 632	$        316
		February's Sales						$       1,708	$        488
		March's Sales							$    1,554
		Total Collection of Sales on account				b	$         2,212	$       2,340	$    2,358	$    6,910
		Total Collection from Sales				a+b	$       14,852	$     12,100	$ 11,238	$ 38,190
	b.
		Balance in Accounts receivable on March 31					$ 910
		Working:			Accounts receivable balance
						March 31
			February's Sales			$ 244
			March's Sales			$ 666
			Total			$ 910
			Alternatively,
			Total Sales for 3 months			$       39,100
			Total Cash collection			$       38,190
			Total Accounts receivable			$ 910