Company projects the following sales for the first three months of the year: $15

Question

Company projects the following sales for the first three months of the year: $15,800 in January; $12,200 in February; and $11,100 in March. The company expects 80%of the sales to be cash and the remainder on account. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round to the nearest dollar. Prepare a revised schedule of cash receipts if receipts from sales on account are 70%in the month of the sale, 20% in the month following the sale, and 10% in the second month following the sale. What is the balance in Accounts Receivable on March 31? (Leave unused and zero balance account cells blank, do not enter "0".)

Explanation / Answer

1) a. Schedule of Expected Cash Collection January February March Total Sales $       15,800 $     12,200 $ 11,100 $ 39,100 Cash Sales a $       12,640 $       9,760 $    8,880 $ 31,280 Sales on accounts $         3,160 $       2,440 $    2,220 Collection of Sales on account: January's Sales $         1,580 $       1,580 February's Sales $       1,220 $    1,220 March's Sales $    1,110 Total Collection of Sales on account b $         1,580 $       2,800 $    2,330 $    6,710 Total Collection from Sales a+b $       14,220 $     12,560 $ 11,210 $ 37,990 b. Balance in Accounts receivable on March 31 = March Sales x 50% to be received in following moths = $       2,220 x 50% = $       1,110 2) a. Schedule of Expected Cash Collection January February March Total Sales $       15,800 $     12,200 $ 11,100 $ 39,100 Cash Sales a $       12,640 $       9,760 $    8,880 $ 31,280 Sales on accounts $         3,160 $       2,440 $    2,220 Collection of Sales on account: January's Sales $         2,212 $ 632 $        316 February's Sales $       1,708 $        488 March's Sales $    1,554 Total Collection of Sales on account b $         2,212 $       2,340 $    2,358 $    6,910 Total Collection from Sales a+b $       14,852 $     12,100 $ 11,238 $ 38,190 b. Balance in Accounts receivable on March 31 $ 910 Working: Accounts receivable balance March 31 February's Sales $ 244 March's Sales $ 666 Total $ 910 Alternatively, Total Sales for 3 months $       39,100 Total Cash collection $       38,190 Total Accounts receivable $ 910

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