Schedule of Cash Collections PetJoy Wholesale Inc., a pet wholesale supplier, wa

Question

Schedule of Cash Collections

PetJoy Wholesale Inc., a pet wholesale supplier, was organized on March 1, 2016. Projected sales for each of the first three months of operations are as follows:

The company expects to sell 11% of its merchandise for cash. Of sales on account, 59% are expected to be collected in the month of the sale, 36% 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 March, April, and May.

March $360,000 April 420,000 May 630,000

Explanation / Answer

PetJoy Wholesale Inc.

Schedule of Cash Collections

For the three months ending May 31, 2016

Note 1 Cash sales credit sales     

March - $360,000 * 11% = $39,600 $360,000* 91% = $327,600

April - $420,000 * 11% = $46,200 $420,000* 91% = $382,200

May - $630,000 * 11% = $69,300 $630,000* 91% = $573,300

March $ April $ May $ Receipts from cash sales Cash sales (10% * current month's sales) note 1 39,600 46,200 69,300 March Month sales on account Collected in March (Note 2) ($327,600*59%) 193,284 Collected in April ($327,600*36%) 117,936 Collected in May ($327,600*5%) 16,380 April Month sales on account   Collected in April ($382,200*59%) 225,498   Collected in May ($382,200*36%) 137,592 May Month sales on account    Collected in May ($573,300*59%) 338,247 Total cash collected 232,884 389,634 561,519

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