Normal Body Text 1 No Spac..T Font Paragraph 80,000* 826-66,080 60,000*.751-45,0

Question

Normal Body Text 1 No Spac..T Font Paragraph 80,000* 826-66,080 60,000*.751-45,060 40,000.683-27,320 Total: 227,087.5 Less amount to be invested: 227,500 Net Present Value: (412.5) 6. Smith Company was organized on August 1 of the current year. Projected sales for the next three months are August September October $250,000 200,000 275,000 The company expects to sell 50% of its merchandise for cash and 50% for sales on account of the sales on account, 30% are expected to be collected in the month of the sale and the remainder in the following month. Prepare a schedule indicating cash collections from cash and accounts receivable for the three months.

Explanation / Answer

Smith Company

Schedule of expected cash collections

70,000

(200,000*50%*70%)

August September October Cash sales 125,000 (250,000*50%) 100,000 (200,000*50%) 137,500 (275,000*50%) Credit sales collected in the month of sale 37,500 (250,000*50%*30%) 30,000 (200,000*50%*30%) 41,250 (275,000*50%*30%) Credit sales collected in the month following the sale(Collection of Accounts Receivable) 87,500 (250,000*50%*70%)

70,000

(200,000*50%*70%)

Total cash collections 162,500 217,500 248,750

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