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Receipts and Receivables

US Sports Company projects the following sales:

April May June
$75,000 $95,000 $110,000

Ninety percent of US' sales are on credit with 60 percent of receivables collected in the month after the sale and the rest of receivables are collected in the second month after the sale. February sales were $60,000 and March sales were $70,000. In the past US' bad debt percentage has been zero and is expected to continue at that level.

a) Prepare a monthly schedule for cash receipts for April through June.

b) What is the balance of Receivables at the end of June?

Solution Preview

a. The collection schedule is 10% cash ( in the month) remaining 90% - 60% in the next month and 30% in the month after that

April Collection
- 10% of April Sales = 7,500
- 30% ...

Solution Summary

The solution explains how to prepare a schedule of cash receipts and the ending receivables

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