Question

Scottsdale Co. has actual sales for July and August and forecast sales for September, October, November, and December as follows:

Actual:
July $ 294,000
August 315,000
Forecast:
September 342,000
October 282,000
November 366,000
December 321,000


Based on past experience, it is estimated that 40% of a month’s sales are collected in the month of sale, 50% are collected in the month following the sale, and 9% are collected in the second month following the sale.
Required:
Calculate the estimated cash receipts for September, October, and November.

Answer 1

The estimated cash receipts for September, October, and November, apply the given percentages of collection to the forecasted sales figures for those months.

Step-by-step explanation:

To calculate the estimated cash receipts for September, October, and November, we'll need to apply the given percentages of collection to the forecasted sales figures for those months. Let's go step by step:

September: 40% of September's sales will be collected in September itself, so the estimated cash receipts for September will be 40% of $342,000, which is $136,800.

October: 50% of September's sales will be collected in October, so the estimated cash receipts for October will be 50% of $342,000, which is $171,000.

November: 9% of September's sales will be collected in November, so the estimated cash receipts for November will be 9% of $342,000, which is $30,780.

Answer 2

Estimated cash receipts for September: $136,800 + $157,500 = $294,300

Estimated cash receipts for October: $112,800 + $171,000 + $28,350 = $312,150

Estimated cash receipts for November: $146,400 + $141,000 + $30,780 = $318,180

How to solve

To calculate the estimated cash receipts for September, October, and November, we'll use the provided information about sales and collection percentages.

Here's a breakdown of the estimated cash receipts for each month:

September

Sales in September: $342,000

40% of September sales collected in September: $342,000 * 0.40 = $136,800

50% of August sales collected in September: $315,000 * 0.50 = $157,500

Estimated cash receipts for September: $136,800 + $157,500 = $294,300

October

Sales in October: $282,000

40% of October sales collected in October: $282,000 * 0.40 = $112,800

50% of September sales collected in October: $342,000 * 0.50 = $171,000

9% of August sales collected in October: $315,000 * 0.09 = $28,350

Estimated cash receipts for October: $112,800 + $171,000 + $28,350 = $312,150

November

Sales in November: $366,000

40% of November sales collected in November: $366,000 * 0.40 = $146,400

50% of October sales collected in November: $282,000 * 0.50 = $141,000

9% of September sales collected in November: $342,000 * 0.09 = $30,780

Estimated cash receipts for November: $146,400 + $141,000 + $30,780 = $318,180