Getty Company expects sales for the first three months of ne

Getty Company expects sales for the first three months of next year to be $185,000, $265,000 and $305,000, respectively. Getty expects 40 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows: 10 percent in the month of the sale and 90 percent in the following month. Compute a schedule of Getty’s cash receipts for the months of February and March.

Solution

February March Expected Sales $       2,65,000 $       3,05,000 Cash Sales $       1,06,000 $       1,22,000 Collection of credit sales $       1,15,800 $       1,61,400 Total cash collection from sales $       2,21,800 $       2,83,400 a. January February March Expected Sales $       1,85,000 $       2,65,000 $       3,05,000 Cash Sales $           74,000 $       1,06,000 $       1,22,000 Collection of credit sales $           11,100 $       1,15,800 $       1,61,400 Total collection from sales $           85,100 $       2,21,800 $       2,83,400 Working: b. January February March Expected Sales $       1,85,000 $       2,65,000 $       3,05,000 Cash Sales -40% $           74,000 $       1,06,000 $       1,22,000 c. January February March Expected Sales $       1,85,000 $       2,65,000 $       3,05,000 Cash Sales $           74,000 $       1,06,000 $       1,22,000 Credit Sales $       1,11,000 $       1,59,000 $       1,83,000 d. January February March Credit Sales $       1,11,000 $       1,59,000 $       1,83,000 Collection of credit sales of : 1st Month $           11,100 $           99,900 2nd Month $           15,900 $       1,43,100 3rd Month $           18,300 Total $           11,100 $       1,15,800 $       1,61,400