Watt’s Lighting Stores made the following sales projection for the next six mont

Question

Watt’s Lighting Stores made the following sales projection for the next six months. All sales are credit sales.

Sales in January and February were $41,000 and $40,000, respectively.
      Experience has shown that of total sales, 10 percent are uncollectible, 35 percent are collected in the month of sale, 45 percent are collected in the following month, and 10 percent are collected two months after sale.

Of the sales expected to be made during the six months from March through August, how much will still be uncollected at the end of August? How much of the uncollected amount does the firm actually expect to collect? (Leave no cells blank - be certain to enter "0" wherever required.)

   

Watt’s Lighting Stores made the following sales projection for the next six months. All sales are credit sales.

Explanation / Answer

b)

Watt's Lighting Stores                  Cash Receipts Schedule Particulars January February March April May June July August   Credit sales $41,000 $40,000 $ 38,000 $   44,000 $ 33,000 $ 42,000 $ 50,000 $ 52,000   Collections: In month of sale(35% of respective month) $ 13,300 $   15,400 $ 11,550 $ 14,700 $ 17,500 $ 18,200 One month after sale (45% in the immediate following month $ 18,000 $   17,100 $ 19,800 $ 14,850 $ 18,900 $ 22,500 Two months after sale( 10% ) $   4,100 $     4,000 $   3,800 $   4,400 $   3,300 $   4,200   Total cash receipts $35,400 $ 36,500 $35,150 $33,950 $39,700 $44,900

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