Company projects the following sales for the first three mon

Company projects the following sales for the first three months of the year: $15,800 in January; $12,200 in February; and $11,100 in March. The company expects 80%of the sales to be cash and the remainder on account. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round to the nearest dollar. Prepare a revised schedule of cash receipts if receipts from sales on account are 70%in the month of the sale, 20% in the month following the sale, and 10% in the second month following the sale. What is the balance in Accounts Receivable on March 31? (Leave unused and zero balance account cells blank, do not enter \"0\".)

Solution

1) a. Schedule of Expected Cash Collection January February March Total Sales $       15,800 $     12,200 $ 11,100 $ 39,100 Cash Sales a $       12,640 $       9,760 $    8,880 $ 31,280 Sales on accounts $         3,160 $       2,440 $    2,220 Collection of Sales on account: January\'s Sales $         1,580 $       1,580 February\'s Sales $       1,220 $    1,220 March\'s Sales $    1,110 Total Collection of Sales on account b $         1,580 $       2,800 $    2,330 $    6,710 Total Collection from Sales a+b $       14,220 $     12,560 $ 11,210 $ 37,990 b. Balance in Accounts receivable on March 31 = March Sales x 50% to be received in following moths = $       2,220 x 50% = $       1,110 2) a. Schedule of Expected Cash Collection January February March Total Sales $       15,800 $     12,200 $ 11,100 $ 39,100 Cash Sales a $       12,640 $       9,760 $    8,880 $ 31,280 Sales on accounts $         3,160 $       2,440 $    2,220 Collection of Sales on account: January\'s Sales $         2,212 $ 632 $        316 February\'s Sales $       1,708 $        488 March\'s Sales $    1,554 Total Collection of Sales on account b $         2,212 $       2,340 $    2,358 $    6,910 Total Collection from Sales a+b $       14,852 $     12,100 $ 11,238 $ 38,190 b. Balance in Accounts receivable on March 31 $ 910 Working: Accounts receivable balance March 31 February\'s Sales $ 244 March\'s Sales $ 666 Total $ 910 Alternatively, Total Sales for 3 months $       39,100 Total Cash collection $       38,190 Total Accounts receivable $ 910