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, 2016. Projected sales for each of the first three months of operations are as follows:

The company expects to sell 12% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 36% 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.

March $250,000 April 360,000 May 460,000

Explanation / Answer

PetJoy Wholesale Inc.

Schedule of Collections from Sales

For the Three Months Ending May 31, 2016

March April May Receipts from cash sales: Cash sales @12% $250000 × 12% =$ 30000 360000×12% =$43200 460000×12% =$55200 March sales on account:
250000 ×88% = 220000 Collected in March 60% = $132000 Collected in April
36% × 220000=$79200 Collected in May 4% ×220000 = $8800 April sales on account: 360000 × 88% =$316800 Collected in April 316800 × 60 % =$190080 Collected in May 316800 × 36%=114048 May sales on account:
460000 × 88% = $404800 Collected in May 60% × 404800=$242880 Total cash collected $162000 $312480 $420928

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