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 30% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 20% pay their accounts in the month of sale, while the remaining 80% 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 $85,000

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

August $127,000 September 159,000 October 232,000

Explanation / Answer

Prepare a schedule of cash collections from sales for August, September, and October

August September October Receipts from cash sales: Cash sales 38100 47700 69600 July sales on account: Collected in August 85000 August sales on account: Collected in August 17780 Collected in September 71120 September sales on account: Collected in September 22260 Collected in October 89040 October sales on account: Collected in October 32480 Total cash receipts 140880 141080 191120

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