Question

Bennett Inc. found that about 45% 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

1 Ans

a).credit sales for May.
$2,90,000*55%=1,59,500$

b) credit sales for June.
$2,80,000*55%=1,54,000$

c) credit sales for July.
$2,95,000*55$=1,62,250$

d) credit sales for August.
$3,00,000*55%=1,65,000$

2 Ans

		July	August
Cash sales	2,95,000*45% 3,00,000*45%	$1,32,750	$1,35,000
Payments on account:
From May credit sales:
$ 1,59,500×5 %		$7,975	----
From June credit sales:
$ 1,54,000×68 %		$1,04,720	----
$ 1,54,000×5%		----	$7,700
From July credit sales:
$1,62,250 ×25 %		$40,563	-----
$1,62,250 ×68 %		----	$1,10,330
From August credit sales:
$ 1,65,000×25 %		----	$41,250
Cash receipts		$2,86,008	$2,94,280

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