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26 December, 05:14

Star Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows: August $250,000 September 200,000 October 275,000 The company expects to sell 50% of its merchandise for cash. Of the sales on account, 30% are expected to be collected in the month of the sale and the remainder in the following month. Prepare a schedule indicating cash collections for August, September, and October.

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  1. 26 December, 06:00
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    The correct answer for August is $162,500, for September is $217,500 and for October is $248,750.

    Explanation:

    According to the scenario, the computation of the given data are as follows:

    August September October

    Sales Amount $250,000 $200,000 $275,000

    Sales on Credit $125,000 $100,000 $137,500

    Sales on Cash $125,000 $100,000 $137,500

    So collection of cash are as follows:

    Aug. credit sales $37,500 $87,500

    Sep. credit sales $30,000 $70,000

    Oct. credit sales $41,250

    Total cash $162,500 $217,500 $248,750
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