Schedule of Cash Collections on Accounts Receivable and Cash Budget
Bennett Inc. found that about 40% of its sales during the month were for cash. Bennett has the following accounts receivable payment experience:
Percent paid in the month of sale | 25 | ||
Percent paid in the month after the sale | 68 | ||
Percent paid in the second month after the sale | 5 |
Bennett's anticipated sales for the next few months are as follows:
April | $250,000 | ||
May | 290,000 | ||
June | 280,000 | ||
July | 295,000 | ||
August | 300,000 |
Required:
1. Calculate credit sales for May.
$
Calculate credit sales for June.
$
Calculate credit sales for July.
$
Calculate credit sales for August.
$
2. Prepare a schedule of cash receipts for July and August. Round your answers to the nearest whole dollar, if necessary. If an amount box does not require an entry, leave it blank or enter "0". Be sure to enter percentages as whole numbers.
Bennett Inc. Schedule of Cash Receipts For July and August |
||||||
July | August | |||||
Cash sales | $ | $ | ||||
Payments on account: | ||||||
From May credit sales: | ||||||
$ × % | ||||||
From June credit sales: | ||||||
$ × % | ||||||
$ × % | ||||||
From July credit sales: | ||||||
$ × % | ||||||
$ × % | ||||||
From August credit sales: | ||||||
$ × % | ||||||
Cash receipts | $ | $ |
Answer 1:
Credit sales for May = $ 174,000 (290,000 * 60%)
Credit sales for June = $ 168,000 (280,000 * 60%)
Credit Sales for July = $ 177,000 (295,000 * 60%)
Credit sales for August = $ 180,000 (300,000 * 60%)
Answer 2:
July | August | |
Receipts from cash sales: | ||
Cash sales | $ 118,000 | $ 120,000 |
Payments on account: | ||
From May credit sales | ||
174,000*5% | $ 8,700 | |
From June credit sales | ||
174,000*68% | $ 114,240 | |
168,000*5% | $ 8,400 | |
From July credit sales | ||
177,000*25% | $ 44,250 | |
177,000*68% | $ 120,360 | |
From August credit sales | ||
180,000*25% | $ 45,000 | |
Cash receipts | $285,190 | $293,760 |
In case of any doubt or clarification, feel free to come back via comments.
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