Question

Kailua and Company is a legal services firm. All sales of legal services are billed to the client (there are no cash sales). Kailua expects that, on average, 20% will be paid in the month of billing, 50% will be paid in the month following billing, and 25% will be paid in the second month following billing. For the next 5 months, the following sales billings are expected: May $84,000 June 100,800 July 77,000 August 86,100 September 88,000

Required:
Prepare a schedule showing the cash expected in payments on accounts receivable in August and in September. If an amount box does not require an entry, leave it blank or enter "0". Be sure to enter percentages as whole numbers.
Kailua and Company Schedule
August September
June:
$ × % $ $
July:
$ × %
$ × %
August:
$ × %
$ × %
September:
$ × %
Total cash receipts $ $

Answer 1

Total cash receipts August $80,920

Total cash receipts August September $79,900

Step-by-step explanation:

Preparation of the schedule showing the cash expected in payments on accounts receivable in August and in September

KAILUA AND COMPANY SCHEDULE

AUGUST SEPTEMBER

June $25,200 $0

($100800 × 25%)

July $38,500 $19,250

($77000 × 50%=$38,500)

($77000 × 25%=$19,250)

August $17,220 $43,050

($ 86,100× 20%=$17,220)

($ 86,100× 50%=$43,050)

September $0 $17,600

($88,000 × 20%=$17,600)

Total cash receipts $80,920 $79,900

($25,200+$38,500+$17,220=$80,920)

($19,250+$43,050+$17,600=$79,900)

Therefore the cash expected in payments on accounts receivable in August and in September are:

Total cash receipts August $80,920

Total cash receipts August September $79,900