Question

Schedule of Cash Collections of Accounts Receivable

Furry Friends 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	$190,000
June	270,000
July	350,000

All sales are on account. 51 percent of sales are expected to be collected in the month of the sale, 37% 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.

Furry Friends Supplies Inc.
Schedule of Collections from Sales
For the Three Months Ending May 31
	May	June	July
May sales on account:
Collected in May	fill in the blank 1
Collected in June		fill in the blank 2
Collected in July			fill in the blank 3
June sales on account:
Collected in June		fill in the blank 4
Collected in July			fill in the blank 5
July sales on account:
Collected in July			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:

FURRY FRIENDS SUPPLIES INC.
SCHEDULE OF COLLECTION FROM SALES FOR THE 3 MONTHS ENDING MAY31
	MAY	JUNE	JULY
MAY SALES ON ACCOUNT:
COLLECTED IN MAY	96900
COLLECTED IN JUNE		70300
COLLECTED IN JULY			22800
JUNE SALES ON ACCOUNT:
COLLECTED IN JUNE		137700
COLLECTED IN JULY			99900
JULY SALES ON ACCOUNT:
COLLECTED IN JULY			178500
TOTAL CASH COLLECTED	$96900	$208000	$301200

WORKINGS:

SCHEDULE OF CASH RECEIPT
PARTICULARS	MAY	JUNE	JULY
SALES ON ACCOUNT	190000	270000	350000
51% EXPECTED TO COLLECT IN THE SAME MONTH	96900 (191000*51%)	137700 (270000*51%)	178500 (350000*51%)
37% IN THE MONTH FOLLOWING THE SALES		70300 (190000*37%)	99900 (270000*37%)
12% IN SECOND MONTH FOLLOWING THE SALES			22800 (190000*12%)
	96900	84000	301200

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