Schedule of Cash Collections of Accounts Receivable Office World Inc. has \"cash

Question

Schedule of Cash Collections of Accounts Receivable

Office World Inc. has "cash and carry" customers and credit customers. Office World estimates that 25% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months of 2016 are as follows:

The Accounts Receivable balance on July 31, 2016, was $72,000.

Prepare a schedule of cash collections from sales for August, September, and October. Round all calculations to the nearest whole dollar.

August $108,000 September 135,000 October 198,000

Explanation / Answer

Office World Inc

Schedule of Collection from Sales

For the Three MOnths Ending 31st oct 2016

August September October Receipt from Cash Sales Cash Sales 27000(108000x25%) 135000*25% = $33750 198000x25%=$49500 July sales on Account collected in August 72000x75% =$ 54000 Collected in August 108000-27000 = 81000*25% = 20250 81000-20250 = 60750 september sales on Account 135000-33750 = $101250 Collected in September 25%of 101250 =$25313 Collected in October $75937 October Sales on Account 148500 Collected in October 148500x25%=$37125 Total CAsh Receipt $101250 $119813 $162562

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