Question

Steve’s Startup is off and running. Steve understands that having sufficient cash is critical. To ensure this he’s asked you to prepare a schedule of cash receipts. Having no history, he’s said to assume that 90% of sales will be on credit. %5 will pay in the month of sale, 70% in the following month and 25% in the month after. He optimistically anticipates that sales will total $200,000 in January, $500,000 in February and $1,200,000 in March. He needs you to project the cash receipts for each month of the first quarter as well as the receivable balance at quarters end.

Answer 1

Schedule of cash receipt Month January Febuary March Total sales Receipt from Cash Sales (10%) (A) Total Credit Sales Receipt from Credit Sales (5 % of the Month Sales) (B) Receipt from Credit Sales (70 % of the following Month Sales) (C) Receipt from Credit Sales (25 % of the Month after Sales) (D) Total CASH RECEIPT (A) + (B) + (C) + (D) 200000 20000 1800001 9000 500000 50000 450000 22500 126000 0 198500 1200000 120000 1080000 54000 315000 45000 534000 ol 29000 Schedule of ending cash receivable balance at the end of qtr Opening Recevable (A) Total Sale (Cash + Credit) (B) TOTAL C = (A+B) Total Cash receipt (D) Closing Receivable (C-D) January ($) Febuary ($) March ($) 0 171000 472500 200000 500000 1200000 200000 6710001 1672500 29000 198500 534000 171000 472500 1138500