Schedule of Cash Collections of Accounts Receivable Pet Stop Inc., a pet wholesa

Question

Schedule of Cash Collections of Accounts Receivable

Pet Stop Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows:

All sales are on account. Of sales on account, 53% are expected to be collected in the month of the sale, 43% in the first month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for May, June, and July.

Schedule of Collections from Sales

For the Three Months Ending July 31

May $280,000 June 350,000 July 510,000

Explanation / Answer

Collection pattern - 53% in the month of sale, 43% in the month following the sale, 4% in the second month following the sale.

Schedule of Collections from sales for three months ending July 31

185,500

(350,000*53%)

May June July May sales on account : Collected in May 148,400 (280,000*53%) Collected in June 120,400 (280,000*43%) Collected in July 11,200 (280,000*4%) June sales on account : Collected in June

185,500

(350,000*53%)

Collected in July 150,500 (350,000*43%) July sales on account : Collected in July 270,300 (510,000*53%) Total cash collected 148,400 305,900 432,000

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