Office World Inc. has \"cash and carry\" customers and credit customers. Office

Question

Office World Inc. has "cash and carry" customers and credit customers. Office World estimates that 20% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months of 2014 are as follows:

The Accounts Receivable balance on July 31, 2014, was $83,000.

Prepare a schedule of cash collections from sales for August, September, and October.

Office World Inc.

Schedule of Collections from Sales

For the Three Months Ending October 31, 2014

August

September

October

Receipts from cash sales:

Cash sales

$  

$  

$  

July sales on account:

Collected in August

  

August sales on account:

Collected in August

  

Collected in September

  

September sales on account:

Collected in September

  

Collected in October

  

October sales on account:

Collected in October

  

Total cash receipts

$  

$  

$  

August $124,000 September 155,000 October 227,000

Explanation / Answer

Prepare a schedule of cash collections from sales for August, September, and October

August September October Receipts from cash sales: Cash sales 24800 31000 45400 July sales on account: Collected in August 83000 August sales on account: Collected in August 24800 Collected in September 74400 September sales on account: Collected in September 31000 Collected in October 93000 October sales on account: Collected in October 45400 Total cash receipts 132600 136400 183800

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