Question

Schedule of Cash Collections of Accounts Receivable

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

May	$170,000
June	220,000
July	330,000

All sales are on account. Of sales on account, 51% are expected to be collected in the month of the sale, 44% in the first month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for May, June, and July.

PET STOP INC.
Schedule of Collections from Sales
For the Three Months Ending July 31
	May	June	July
May sales on account:
Collected in May
Collected in June
Collected in July
June sales on account:
Collected in June
Collected in July
July sales on account:
Collected in July
Total cash collected	$	$	$

Answer 1

PET STOP INC.
Schedule of Collections from Sales
For the Three Months Ending July 31
	May	June	July
May sales on account:
Collected in May	86,700	-	-
Collected in June	-	74,800	-
Collected in July	-	-	8,500
June sales on account:
Collected in June	-	112,200	-
Collected in July	-	-	96,800
July sales on account:
Collected in July	-	-	168,300
Total cash collected	$86,700	$187,000	$273,600

May sales on account:

Collected in May = 170,000 x 51% = 86,700

Collected in June = 170,000 x 44% = 74,800

Collected in July = 170,000 x 5% = 8,500

June sales on account:

Collected in June = 220,000 x 51% = 112,200

Collected in July = 220,000 x 44% = 96,800

July sales on account:

Collected in July = 330,000 x 51% = 168,300