Question

Getty Company expects sales for the first three months of next year to be $185,000, $265,000 and $305,000, respectively. Getty expects 40 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows: 10 percent in the month of the sale and 90 percent in the following month. Compute a schedule of Getty’s cash receipts for the months of February and March.

Answer 1

					February		March
Expected Sales					$       2,65,000		$       3,05,000
Cash Sales					$       1,06,000		$       1,22,000
Collection of credit sales					$       1,15,800		$       1,61,400
Total cash collection from sales					$       2,21,800		$       2,83,400
a.			January		February		March
Expected Sales			$       1,85,000		$       2,65,000		$       3,05,000
Cash Sales			$           74,000		$       1,06,000		$       1,22,000
Collection of credit sales			$           11,100		$       1,15,800		$       1,61,400
Total collection from sales			$           85,100		$       2,21,800		$       2,83,400
Working:
b.			January		February		March
Expected Sales			$       1,85,000		$       2,65,000		$       3,05,000
Cash Sales -40%			$           74,000		$       1,06,000		$       1,22,000
c.
			January		February		March
Expected Sales			$       1,85,000		$       2,65,000		$       3,05,000
Cash Sales			$           74,000		$       1,06,000		$       1,22,000
Credit Sales			$       1,11,000		$       1,59,000		$       1,83,000
d.
			January		February		March
Credit Sales			$       1,11,000		$       1,59,000		$       1,83,000
Collection of credit sales of :
1st Month			$           11,100		$           99,900
2nd Month					$           15,900		$       1,43,100
3rd Month							$           18,300
Total			$           11,100		$       1,15,800		$       1,61,400