Question

schedule of cash collections of accounts receivable pampered pal inc., a pet supplies distributor, was organized on january 1. projected sales for each of the first three months of operations are as follows: month amount january $230,000 february 320,000 march 470,000 all sales are on account. collections are expected as follows: 57% of sales are expected to be collected in the month of the sale, 38% in the month following the sale, and the remainder in the second month following the sale. prepare a schedule indicating cash collections from sales for january, february, and march.

Answer 1

January's collections are $131,100, February's are $313,800, and March's are $401,000.

Step-by-step explanation:

To prepare a schedule of cash collections of accounts receivable for Pampered Pal Inc., we need to calculate the expected cash collections based on the provided percentages for the months of January, February, and March.

Here is the breakdown:

• January Sales: $230,000
  • 57% in January: $230,000 * 57% = $131,100
  • 38% in February: $230,000 * 38% = $87,400
  • 5% in March: $230,000 * 5% = $11,500
• February Sales: $320,000
  • 57% in February: $320,000 * 57% = $182,400
  • 38% in March: $320,000 * 38% = $121,600
• March Sales: $470,000
  • 57% in March: $470,000 * 57% = $267,900

Now we can compile the schedule of cash collections:

January Collections:

$131,100 (57% of January sales)

February Collections:

$313,800 (57% of February sales + 38% of January sales)

March Collections:

$401,000 (57% of March sales + 38% of February sales + 5% of January sales)