Rodgers Enterprises expects to make the following sales revenue in the first qua

Question

Rodgers Enterprises expects to make the following sales revenue in the first quarter of the calendar year 2016 as follows:

January   February March

Sales: $180,000 $135,000 $162,000

25% of the sales are on account (accounts receivable), while the other 75% are for cash. The collection pattern for Rogers' accounts receivable follows:

Collections for:

Current month's credit sales......... 50%

First month after credit sales..........30%

Second month after credit sales......18%

Uncollectible Accounts Receivable....2%

How much will the expected cash receipts amount to for ONLY the month of March, 2016? Please show all work.

Explanation / Answer

credit sales of Jan = 180,000* .25 = 45000

credit sales of feb = 135,000 *.25 = 33750

Credit sales of mar = 162,000 * .25 = 40500

collection schedule for march

cash sales collection of march   (162,000 *.75) 121,500 credit sales collection Jan sales   (45000 * .18) 8100 Feb sales    (33750*.30) 10125 Mar sales   (40500*.50) 20250 Total collection 159,975

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