PetCare Supplies Inc., a pet wholesale supplier, was organized on May 1, 2014. Projected sales for each of the first three months

PetCare Supplies Inc., a pet wholesale supplier, was organized on May 1, 2014. Projected sales for each of the first three months of operations are as follows:

May $126,000
June 145,000
July 162,000

The company expects to sell 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month of the sale, 35% in the 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.


Answer:






















PETCARE SUPPLIES INC.
Schedule of Collections from Sales
For the Three Months Ending July 31, 2014
May June July
Receipts from cash sales:
Cash sales (10% × current month’s sales) $12,600 $ 14,500 $ 16,200
May sales1 on account:
Collected in May ($113,400 × 60%) 68,040
Collected in June ($113,400 × 35%) 39,690
Collected in July ($113,400 × 5%) 5,670
June sales2 on account:
Collected in June ($130,500 × 60%) 78,300
Collected in July ($130,500 × 35%) 45,675
July sales3 on account:
Collected in July ($145,800 × 60%) 87,480
Total cash collected $80,640 $132,490 $155,025
1 $126,000 × 90% = $113,400
2 $145,000 × 90% = $130,500
3 $162,000 × 90% = $145,800