Question

how do you find the account sales and cash sales on a schedule of cash collections?

I was doing my accounting homework and I got stuck on this section because I couldn't find how to do it in the book.

Harvest Oaks Furniture, Inc. manufactures wooden dining chairs that sell for $100 each. The company is preparing its second quarter budget. The following information has been assembled. Use the information in A-C to answer Part 1. A. Estimated unit sales for the next several months: Month April May June July August Units 25,000 30,000 22,000 20,000 24,000 B. 20% of sales are for cash at the time of sale. The remaining 80% of sales are on account. These sales on account are usually collected in the following pattern: 35% 45% 15% 5% in the month of sale in the month following sale in the second month following sale uncollectible C. Sales for February totaled 32,000 units and sales for March totaled 27,000 units. Use the information the following information to answer Part 2. DO NOT USE THE NUMBERS YOU COMPUTED IN PART 1. ASSUME THE FOLLOWING INFORMATION INSTEAD. D. Assume that Harvest Oaks has correctly computed its expected cash receipts and disbursements, and correctly entered them into the cash budget in Part 2 E. Harvest Oaks beginning balance of cash on April 1 is $450,000 Harvest Oaks wants to maintain a minimum cash balance of $400,000. The company has an agreement with a local bank that allows the company to borrow money in any increment at the beginning of each month. The interest rate on these loans is 15 per month and is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. 14 693 words

Answer 1

Solution

Statement showing Schedule of Cash Collection

Schedule of Cash Collection
	April	May	June	Quarter
	($)	($)	($)	($)
February Account Sales	3,84,000.00	-	-	3,84,000.00
March Account Sales	9,72,000.00	3,24,000.00	-	12,96,000.00
April Cash Sales	5,00,000.00	-	-	5,00,000.00
April Account Sales	7,00,000.00	9,00,000.00	3,00,000.00	19,00,000.00
May Cash Sales	-	6,00,000.00	-	6,00,000.00
May Account Sales	-	8,40,000.00	10,80,000.00	19,20,000.00
June Cash Sales	-	-	4,40,000.00	4,40,000.00
June Account Sales	-	-	6,16,000.00	6,16,000.00
Total Cash Collection	25,56,000.00	26,64,000.00	24,36,000.00	76,56,000.00

Workings

	Sales in Units	Price Per unit	Total Sales	Cash Sales @ 20%	Credit Sales @ 80%	Recovery of Credit Sales
						February		March		April		May		June
		($)	($)	($)	($)	%	$	%	$	%	$	%	$	%	$
February	32000	100.00	32,00,000.00	6,40,000.00	25,60,000.00	35%	8,96,000.00	45%	11,52,000.00	15%	3,84,000.00
March	27000	100.00	27,00,000.00	5,40,000.00	21,60,000.00			35%	7,56,000.00	45%	9,72,000.00	15%	3,24,000.00
April	25000	100.00	25,00,000.00	5,00,000.00	20,00,000.00					35%	7,00,000.00	45%	9,00,000.00	15%	3,00,000.00
May	30000	100.00	30,00,000.00	6,00,000.00	24,00,000.00							35%	8,40,000.00	45%	10,80,000.00
June	22000	100.00	22,00,000.00	4,40,000.00	17,60,000.00									35%	6,16,000.00