4. Mann Company was organized on March 1 of the current year. Projected sales fo

ID: 2408812 • Letter: 4

Question

4. Mann Company was organized on March 1 of the current year. Projected sales for each of the first three months of operation are as follows March $640,000 April $720,000 May $900,000 The company expects to sell 20% of its merchandise for cash. Of the sales on account 50% are expected to be collected in the month of sale, 30% in the month following the sale, and the remainder in the second month following the sale. Prepare a schedule indicating cash collections from sales for March, April, and May (3 pts.)

Explanation / Answer

MANN COMPANY

Schedule of Expected Cash Collections

March

April

May

From March Cash sales

128,000

[ 640,000 x 0.20]

From March Credit Sales

256000

[640,000x0.80x0.50]

153600

[640,000x0.80x0.30]

102,400

[640,000x0.80x0.20 ]

From April cash Sales

144,000

[ 720,000 x 0.20]

From April credit sales

288,000

[ 720,000 x 0.80 x 0.50]

172,800

[720,000x0.80x0.20]

From May cash sales

180,000

[ 900,000 x 0.20]

From May credit sales

360,0000

[900,000x0.80x0.50]

Total cash collections

$384,000

$585,600

$815,200