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Watts Lighting Stores made the following sales projection for the next six months. All sales are credit sales March $46,000 June $50,000 April 52,000 July 58,000 May 41,000 August 60,000 Sales in January and February were $49,000 and $48,000, respectively. Experience has shown that of total sales, 10 percent are uncollectible, 25 percent are collected in the month of sale, 35 percent are collected in the following month, and 30 percent are collected two months after sale. a. Prepare a monthly cash receipts schedule for the firm for March through August. Watts Lighting Stores Cash Receipts Schedule May June August Credit sales In month of One month after sale Two months after sale Total cash receipts

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Answer #1

I Have done the Solution in Excel Since the calculations will be easier.

I've attached two pictures one solution and other the formula used.

It is pretty straightforward.

Solution

Jan Feb Mar Apr May Jun Jul Aug $49,000 $48,000 $46,000 $52,000 $41,000 $50,000 $58,000 60,000 6 8 9 Watts Lighting Stores Feb Jan Mar Apr un Jul Aug Credit Sales In month of Sale One Month After Sale 35% Two Month after Sale 30% Total Cash Receipt $49,000$48,000|$46,000|$52,000$41,000$50,000 $58,000| $60,000 11500 $13,000 $10,250 $12,500 $14,500 $15,000 $16,800$16,100 $18,200 $14,350 $17,500 $20,300 $14,700 $14,400 $13,800 $15,600 $12,300 $15,000 $89,000 $95,500 $83,250 $92,450 $102,300 $110,300 14 25% 20 21 Uncollectable Collected in the Month of sale Collected in Following Month Collected in two months 10% 25% 35% 30%

Explanation

Jan Feb Mar 49000 48000 52000 41000 May 58000 Aug Watts Lighting Stores Feb Jan 49000 48000 46000 Mar Ma 41000 Jul 58000 113 C14 113 C15 H13 C16 Jun Au Credit Sales In month of Sale One Month After Sale Two Month after Sale Total Cash Receipt 52000 0.25 0.35 0.3 -SF$13 C14 G13 C14 -E13 C15 -D13 C16 -F13 C15 -E13 C16 H13 C14 G13 C15 F13 C16 113 C14 -H13 C15 -G13 C16 K13 C14 113 C15 113 C16 SUM(F13:F16) SUM(G13:G16) SUM(H13:H16) SUM(13:116)SUM(13:J16) SUM(K13:K16) 20

Please Let me know if you need any more clarification.

Regards,

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