Question

Schedule of Cash Collections of Accounts Receivable Pet Place Supplies Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows: May $290,000 June 410,000 July 520,000 All sales are on account. Of sales on account, 52% are expected to be collected in the month of the sale, 44% 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 May, June, and July.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following formula:

Sales:

May $290,000

June 410,000

July 520,000

52% are expected to be collected in the month of the sale

44% in the month following the sale

4% in the second month following the sale

We need to calculate the cash collection for each month:

Cash collection May:

Cash collection from sales on account May= (290,000*0.52)= 150,800

Total cash collection May= $150,800

Cash collection June:

Cash collection from sales on account May= (290,000*0.44)= 127,600

Cash collection from sales on account June= (410,000*0.52)= 213,200

Total cash collection June= $340,800

Cash collection July:

Cash collection from sales on account May= (290,000*0.4)= 11,600

Cash collection from sales on account June= (410,000*0.44)= 180,400

Cash collection from sales on account July= (520,000*0.52)= 270,400

Total cash collection July= $462,400