Schedule of Cash Collections of Accounts Receivable OfficeMart Inc. has \"cash a
ID: 2517519 • Letter: S
Question
Schedule of Cash Collections of Accounts Receivable OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 25% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 20% pay their accounts in the month of sale, while the remaining 80% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows: October $132,000 November 165,000 December 242,000 The Accounts Receivable balance on September 30 was $88,000. Prepare a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar. OfficeMart Inc. Schedule of Cash Collections from Sales For October November December Receipts from cash sales: Cash sales September sales on account: Collected in October October sales on account Collected in October Collected in November November sales on account: Collected in November Collected in December December sales on account: Collected in December Total cash receiptsExplanation / Answer
OfficeMart Inc.
Schedule of cash collections from sales
For the three months ending December 31
October
November
December
Receipts from cash sales;
Cash sales (25% of total sales)
$33000
$41250
$60500
September sales on account;
Collected in October
$88000
October sales on account;
Collected in October
$19800
Collected in November
$79200
November sales on account;
Collected in November
$24750
Collected in December
$99000
December sales on account;
Collected in December
$36300
Total cash collected
$140800
$145200
$195800
Working Note;
1. September credit sales collected in October = $88000 (It is given that on 30 September accounts balance is $88000)
2. October credit sales collected in October;
Credit sales ($132000 * .75) = $99000
20% collected in same month ($99000 * 0.20) = $19800
3. October credit sales collected in November;
($99000 * 0.80) = $79200
4. November credit sales collected in November;
Credit sales ($165000 * .75) = $123750
20% collected in same month ($123750 * 0.20) = $24750
5. November credit sales collected in December;
($123750 * 0.80) = $99000
6. December credit sales collected in December;
Credit sales ($242000 * .75) = $181500
20% collected in same month ($181500 * 0.20) = $36300
OfficeMart Inc.
Schedule of cash collections from sales
For the three months ending December 31
October
November
December
Receipts from cash sales;
Cash sales (25% of total sales)
$33000
$41250
$60500
September sales on account;
Collected in October
$88000
October sales on account;
Collected in October
$19800
Collected in November
$79200
November sales on account;
Collected in November
$24750
Collected in December
$99000
December sales on account;
Collected in December
$36300
Total cash collected
$140800
$145200
$195800
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