Question

Schedule of Cash Collections of Accounts Receivable OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 30% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows: October $133,000 November 166,000 December 243,000 The Accounts Receivable balance on September 30 was $89,000. Prepare a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar.

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Sales:

30% on cash

70% on account

Sales on account:

25% in the month of the sale

75% in the following month

October $133,000

November 166,000

December 243,000

The Accounts Receivable balance on September 30 was $89,000.

Cash collection October:

Sales on cash= 133,000*0.30= 39,900

Sales on account from October= (133,000*0.7)*0.25= 23,275

Sales on account September= 89,000

Total cash collection= $152,175

Cash collection November:

Sales on cash= 166,000*0.30= 49,800

Sales on account from October= (166,000*0.7)*0.25= 29,050

Sales on account October= (133,000*0.7)*0.75= 69,825

Total cash collection= $148,675

Cash collection December:

Sales on cash= 243,000*0.30= 72,900

Sales on account from October= (243,000*0.7)*0.25= 42,525

Sales on account October= (166,000*0.7)*0.75= 87,150

Total cash collection= $202,575