DeBerg Company has the following sales projections for its second and third quarters: April $100,000 May $120,000 June $140,000 July $160,000 August $150,000 September $130,000 Normal cash collection experience has been that 50% of sales are collected during the month of sale, 30% in the month following sale, and 15% in the second month following sale. The remaining 5% of sales is never collected. Prepare the schedule of cash collections for the third quarter, by month and in total.

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anthougo anthougo · Answer 1 · 2020-04-09T04:57:04+02:00

Answer:

The Schedule of Cash Collections is below:

Cash Collection from Sales JULY AUGUST SEPTEMBER

50% from month $80,000 $75,000 $65,000

30% from previous month $42,000 $48,000 $45,000

15% from two previous months$18,000 $21,000 $24,000

$140,000 $144,000 $134,000

Explanation:

The schedule of cash collection is attached herein.

July collections are as follows:

50% of $160,000 July + 30% of $140,000 June + 15% of $120, 000 May Sales

August collections are as follows:

50% of $150,000 August + 30% of $160,000 July + 15% of $140,000 June Sales

September collections are as follows:

50% of $130,000 September + 30% of $150,000 August + 15% of $160,000 July Sales