Question

Watt’s Lighting Stores made the following sales projection for the next six months. All sales are credit sales.

March...............................        $35,000

April.................................          41,000

May..................................          30,000

June.................................          39,000

July...................................          47,000

August..............................          49,000

Sales in January and February were $38,000 and $37,000, respectively.

Experience has shown that of total sales, 10 percent are uncollectible, 30 percent are collected in the month of sale, 40 percent are collected in the following month, and 20 percent are collected two months after sale.

Prepare a monthly cash receipts schedule for the firm for March through August.

Of the sales expected to be made during the six months from March through August, how much will still be uncollected at the end of August? How much of this is expected to be collected later?

Answer 1