Question

Schedule of Cash Collections of Accounts Receivable

Pet Place Supplies 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	$320,000
June	370,000
July	480,000

All sales are on account. Of sales on account, 51% are expected to be collected in the month of the sale, 45% 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 May, June, and July.

Pet Place Supplies Inc.
Schedule of Cash 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			$
April sales on account:
Collected in June
Collected in July
July sales on account:
Collected in July
Total cash collected	$	$	$

Answer 1

Pet Place Supplies Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending July 31					Explanation to Solution
	May	June	July		May	June	July
May sales on account:
Collected in May	163200				(320000*51%)
Collected in June		144000				(320000*45%)
Collected in July			12800				(320000*4%)
June sales on account:
Collected in June		188700				(370000*51%)
Collected in July			166500				(370000*45%)
July sales on account:
Collected in July			244800				(480000*51%)
Total cash collected	163200	332700	424100		Total	Total	Total
Working Note:	May	June	July
Budgeted Sales	320000	370000	480000
Collection Pattern:
In the Month	51%
In First Month Following Sales	45%
In Second Month Following Sales	4%
	100%