Question

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: May $380,000 June 420,000 July 580,000 All sales are on account. Of sales on account, 51% are expected to be collected in the month of the sale, 44% 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.

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

May $380,000 June 420,000 July 580,000

All sales are on account. Of sales on account, 51% are expected to be collected in the month of the sale, 44% in the first month following the sale, and the remainder in the second month following the sale.

We need to calculate the cash collection for May, June, and July.

Cash collection May:

Sales on account from May= 380,000*0.51= 193,800

Cash collection June:

Sales on account from May= 380,000*0.44= 167,200

Sales on account from June= 420,000*0.51= 214,200

Total cash collection= $381,400

Cash collection July:

Sales on account from May= 380,000*0.09= 34,200

Sales on account from June= 420,000*0.44= 184,800

Sales on account from July= 580,000*0.51= 295,800

Total cash collection= $514,800