Use the following information for questions #10 and #11. PetJoy Wholesale Inc.,
ID: 2588476 • Letter: U
Question
Use the following information for questions #10 and #11. PetJoy Wholesale Inc., a pet wholesale supplier, was organized on March 1, 2017. Projected sales for each of the first three months of operations are as follows: March $220,000 April 350,000 May 410,000 The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 20% in the month following the sale, and the remainder in the second month following the sale. 10. How much cash does PetJoy expect to collect in March? 11. How much cash does PetJoy expect to collect in May? Use the following information for questions #10 and #11. PetJoy Wholesale Inc., a pet wholesale supplier, was organized on March 1, 2017. Projected sales for each of the first three months of operations are as follows: March $220,000 April 350,000 May 410,000 The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 20% in the month following the sale, and the remainder in the second month following the sale. 10. How much cash does PetJoy expect to collect in March? 11. How much cash does PetJoy expect to collect in May?Explanation / Answer
March:
Sales = $220,000
Cash Sales = 25% * $220,000
Cash Sales = $55,000
Credit Sales = 75% * $220,000
Credit Sales = $165,000
April:
Sales = $350,000
Cash Sales = 25% * $350,000
Cash Sales = $87,500
Credit Sales = 75% * $350,000
Credit Sales = $262,500
May:
Sales = $410,000
Cash Sales = 25% * $410,000
Cash Sales = $102,500
Credit Sales = 75% * $410,000
Credit Sales = $307,500
Answer 10.
Expected Collection in March = March Cash Sales + 70% * March Credit Sales
Expected Collection in March = $55,000 + 70% * $165,000
Expected Collection in March = $170,500
Answer 11.
Expected Collection in May = May Cash Sales + 70% * May Credit Sales + 20% * April Credit Sales + 10% * March Credit Sales
Expected Collection in May = $102,500 + 70% * $307,500 + 20% * $262,500 + 10% * $165,000
Expected Collection in May = $386,750