Preparing a Schedule of Cash Collections on Accounts Receivable Kailua and Compa
ID: 2445180 • Letter: P
Question
Preparing a Schedule of Cash Collections on Accounts Receivable
Kailua and Company is a legal services firm. All sales of legal services are billed to the client (there are no cash sales). Kailua expects that, on average, 20% will be paid in the month of billing, 50% will be paid in the month following billing, and 25% will be paid in the second month following billing. For the next five months, the following sales billings are expected:
Required:
Prepare a schedule showing the cash expected in payments on accounts receivable in August and in September. If an amount box does not require an entry, leave it blank or enter "0".
Kailua and Company Schedule
August
September
June:
Correct 5
Correct 6
Correct 7
Correct 8
July:
Correct 10
Correct 11
Correct 12
Correct 13
Correct 14
Correct 15
August:
Correct 17
Correct 18
Correct 19
Correct 20
Correct 21
Correct 22
September:
Correct 24
Correct 25
Correct
Correct
Total cash receipts
Correct
Correct
May $84,000 June 100,800 July 77,000 August 87,200 September 92,000Explanation / Answer
Cash expected in payments on accounts receivable in August and in September.
August:-
20 % of August Sales = 87200 * 20 % = 17440
50 % of July sales = 77000 * 50 % = 38500
25 % of June sales = 100800 * 25% = 25200
Cash expected in payments on accounts receivable in August 81140
September:-
20 % of September sales = 92000 * 20% = 18400
50 % of august sales = 87200 * 50% = 43600
25 % of july sales = 77000 * 25% = 19250
Cash expected in payments on accounts receivable in September 81250