Ed\'s Waterbeds has made the following sales projections for the next six months

Question

Ed's Waterbeds has made the following sales projections for the next six months. All sales are credit sales March April May $49,000 57,000 59,000 $45,000 June 51,000 July 0,000 August Sales in January and February were $48,000 and $47,000 respectively Experience has shown that 10 percent of total sales 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 a. Prepare a monthly cash receipts schedule for the firm for March through August. Ed's Waterbeds Cash Receipts Schedule Janua ebrua March April May June July August 47,000 S 45,000 S 51,000 S 15300 18000 40,000 S 57,000 S 17100 19600 48,000 $ Sales Collections of current sales Collections of prior month's sales Collections of sales 2 months earlier 13500 18,800 9600 12000 20400 9000 49,000 S 14700 16000 10200 59,000 17700 22800 9800 9400 8000 Total cash receipts 41900 $ 42700 S 41400 S 40900 S 44700 S 50300 b. Of the sales expected to be made during the six months from March to August, how much will still be uncollected at the end of August? How much of this is expected to be collected later? Amount Uncollected Expected to be collected S

Explanation / Answer

Calculations:

b Amount Uncollected $       76,900 Expected to be collected $       46,800

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