In: Accounting
Schedule of Cash Collections of Accounts Receivable
Office World Inc. has "cash and carry" customers and credit customers. Office World 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 of 2016 are as follows:
August | $133,000 |
September | 166,000 |
October | 243,000 |
The Accounts Receivable balance on July 31, 2016, was $89,000.
Prepare a schedule of cash collections from sales for August, September, and October. Round all calculations to the nearest whole dollar.
Office World Inc. | |||
Schedule of Collections from Sales | |||
For the Three Months Ending October 31, 2016 | |||
August | September | October | |
Receipts from cash sales: | |||
Cash sales | $ | $ | $ |
July sales on account: | |||
Collected in August | |||
August sales on account: | |||
Collected in August | |||
Collected in September | |||
September sales on account: | |||
Collected in September | |||
Collected in October | |||
October sales on account: | |||
Collected in October | |||
Total cash receipts | $ | $ | $ |
Office World Inc | |||
Schedule of collection from sales | |||
For the three months Ending October 31, 2016 | |||
August | September | October | |
Receipt from cash sales | |||
Cash sales | $133,000*30% = $39,900 | $166,000*30% = $49,800 | $243,000*30% = $72,900 |
July sales on account | |||
Collected in August | $ 89,000 | ||
August sales on account | |||
Collected in August | $133,000*70%*20% = $18,620 | ||
Collected in September | $133,000*70%*80% = $74,480 | ||
September sales on account | |||
Collected in September | $166,000*70%*20% = $23,240 | ||
Collected in October | $166,000*70%*80% = $92,960 | ||
October sales on account | |||
Collected in October | $243,000*70%*20% = $34,020 | ||
total cash receipts | $ 147,520 | $ 147,520 | $ 199,880 |