Question

Company projects the following sales for the first three months of the​ year: $14300 in January​;$ 10100, in February​;and $10,400 in March.

The company expects 60​% of the sales to be cash and the remainder on account. Sales on account are collected 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 schedule of cash receipts for Armand for January February, and March. What is the balance in Accounts Receivable on March 31?
2.	Prepare a revised schedule of cash receipts if receipts from sales on account are 60​% in the month of the​ sale, 30% 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?

Answer 1

(1) Schedule of Cash Receipt :-

	Jan	Feb	March
Cash Sale	(14300 * 60%) =8580	(10100 * 60%) =6060	(10400 * 60%) =6240
Credit Sale Collected in Same month	(14300 * 40% * 50%) =2860	(10100 * 40% * 50%) =2020	(10400 * 40% * 50%) =2080
Credit Sale Collected in the following month	-	2860	2020
Total Cash collected	11440	10940	10340

Account Receivable on 31 March = (10400 * 40% * 50%) =2080

(2) Schedule of Cash Receipt :-

	Jan	Feb	March
Cash Sale	(14300 * 60%) =8580	(10100 * 60%) =6060	(10400 * 60%) =6240
Credit Sale Collected in Same month	(14300 * 40% * 60%) =3432	(10100 * 40% * 60%) =2424	(10400 * 40% * 60%) =2496
Credit Sale Collected in the following month	-	(14300 * 40% * 30%) =1716	(10100 * 40% * 30%) =1212
Credit Sale Collected in the second month following the sale	-	-	(14300 * 40% * 10%) =572
Total Cash collected	12012	10200	10520

Account Receivable on 31 March :-

Feb Sale = (10100 * 40% * 10%) = 404

March Sale = (10400 * 40% * 40%) = 1664

Account Receivable on 31 March = 404 + 1664 = 2068