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:

August	$109,000
September	136,000
October	199,000

The Accounts Receivable balance on July 31, 2016, was $73,000.

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

Office World Inc.
Schedule of Collections from Sales
For the Three Months Ending October 31, 2016
	August	September	October
Receipts from cash sales:
Cash sales	$	$	$
July sales on account:
Collected in August
August sales on account:
Collected in August
Collected in September
September sales on account:
Collected in September
Collected in October
October sales on account:
Collected in October
Total cash receipts	$	$	$

Answer 1

Schedule of expected cash collections
	August	September	October
Receipts from cash sales:
Cash Sales	$     32,700	$         40,800	$     59,700
July sales on account:
Collected in August	$     58,400
August sales on account:
Collected in August	$     15,260
Collected in September		$         61,040
September sales on account:
Collected in September		$         19,040
Collected in October			$     76,160
October sales on account:
Collected in October			$     27,860
Total cash receipts	$ 1,06,360	$      1,20,880	$ 1,63,720
Workings:
	August	September	October
Sales	$ 1,09,000	$      1,36,000	$ 1,99,000
Cash Sales (30%)	$     32,700	$         40,800	$     59,700
Credit Sales (70%)	$     76,300	$         95,200	$ 1,39,300
Here the cash sales is collected in the month of sales i.e 30% further of remaining 70% will be recorded 20% in sales month and 80% in next month the sale.
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