Question

1. The company’s sales manager prepared the following sales forecast for the first half of the year.

January	$235,000
February	198,000
March	211,000
April	285,000
May	300,000
June	305,000

Historically, the cash collection of sales has been as follows:

• 47% of sales collected in the month of sale
• 50% of sales collected in the month following the sale
• 3% of sales collected in the second month following the sale
• All sales are on account

Prepare the schedule of the cash collection of Accounts Receivable for the second quarter

Answer 1

Solution:

Schedule of Expected Cash Collection
Particulars	April	May	June	Total
Collection from Febuary Sales	$5,940			$5,940
Collection from March Sales	$1,05,500	$6,330		$1,11,830
Collection from April Sales	$1,33,950	$1,42,500	$8,550	$2,85,000
Collection from May Sales		$1,41,000	$1,50,000	$2,91,000
Collection from June Sales			$1,43,350	$1,43,350
Total Cash collection	$2,45,390	$2,89,830	$3,01,900	$8,37,120