Question

Schedule of Cash Collections of Accounts Receivable

Pet Supplies Inc., a pet wholesale supplier, was organized on January 1. Projected sales for each of the first three months of operations are as follows:

January	$200,000
February	240,000
March	340,000

All sales are on account. 50% of sales are expected to be collected in the month of the sale, 46% 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.

Pet Supplies Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending March 31
	January	February	March
January sales on account:
Collected in January	$fill in the blank 1
Collected in February		$fill in the blank 2
Collected in March			$fill in the blank 3
February sales on account:
Collected in February		fill in the blank 4
Collected in March			fill in the blank 5
March sales on account:
Collected in March			fill in the blank 6
Total cash collected	$fill in the blank 7	$fill in the blank 8	$fill in the blank 9

Answer 1

Solution:

Schedule of cash collecion from sales
For the Three month Ending March 31
	January	February	March
January sales on account	2,00,000
Collected in January	100000 (200000 x 50%)
Collected in February		92000 (200,000 x 46%)
Collected in March			8000 (200,000 x 4%)
February sales on account		2,40,000
Collected in February		120000 (240,000 x 50%)
Collected in March			110400 (240,000 x 46%)
March sales on account			3,40,000
Collected in March			170000 (340,000 x 4%)
Total cash Collected	100000	212000 (92000 + 120000)	288400 (8000 + 110400 + 170000)