Schedule of Cash Collections of Accounts Receivable PetJoy Wholesale Inc., a pet

Question

Schedule of Cash Collections of Accounts Receivable

PetJoy Wholesale Inc., a pet wholesale supplier, was organized on March 1, 2014. Projected sales for each of the first three months of operations are as follows:

The company expects to sell 11% of its merchandise for cash. Of sales on account, 51% are expected to be collected in the month of the sale, 45% 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.

PetJoy Wholesale Inc.

Schedule of Collections from Sales

For the Three Months Ending May 31, 2014

March

April

May

Receipts from cash sales:

Cash sales

$  

$  

$  

March sales on account:

Collected in March

Collected in April

Collected in May

April sales on account:

Collected in April

Collected in May

May sales on account:

Collected in May

Total cash collected

$  

$  

$  

Explanation / Answer

Petjoy Wholesale inc Schedule of collection from sales For the three months ending may 31, 2014 March April May Receipts from cash sales Cash sales $310,000*11% = $34,100 $360,000*11% = $39,600 $500,000*11% = $55,000 March sales on account $310,000-$34,100 = $275,900 collected in march $275,900*51% = $140,709 collected in april $275,900*45% = $124,155 collected in may $275,900*4% = $11,036 April sales on account $360,000 - $39,600 = $320,400 collected in april $320,400*51% = $163,404 collected may $320,400*45% = $144,180 may sales on account $500,000-$55,000 = $445,000 collected in may $445,000*51% = $226,950 total cash collected =34100+140709 =39600+124155+163404 =55000+11036+144180+226950

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