Tableware Unlimited Company plans to sell china and other dining-related items over the internet. The company plans to begin business on January 1, Year 1. The company's accountant has prepared the following sales budget for the first quarter of Year 1:
In anticipation of preparing a cash budget, the accountant needs to compute the expected monthly cash collections. Because the company is new and has no collection experience of its own, the accountant contacted an industry trade group and obtained the following industry collection data:
Collections on account:
70% in the month of sale
20% in the month following sale
6% in the second month following sale
Uncollectible accounts have averaged 4% of receivables. The company gives a 2% discount for payments made by customers during the month of sale.Required:
Prepare a schedule of cash collections from sales by month and in total for the first quarter.

Question

Tableware Unlimited Company plans to sell china and other dining-related items over the internet. The company plans to begin business on January 1, Year 1. The company's accountant has prepared the following sales budget for the first quarter of Year 1:
  In anticipation of preparing a cash budget, the accountant needs to compute the expected monthly cash collections. Because the company is new and has no collection experience of its own, the accountant contacted an industry trade group and obtained the following industry collection data:
Collections on account:
70% in the month of sale
20% in the month following sale
6% in the second month following sale
Uncollectible accounts have averaged 4% of receivables. The company gives a 2% discount for payments made by customers during the month of sale.Required:
Prepare a schedule of cash collections from sales by month and in total for the first quarter.

Quizplus · Accepted Answer

The Answer of Tableware Unlimited Company plans to sell china and other dining-related items over the internet. The company plans to begin business on January 1, Year 1. The company's accountant has prepared the following sales budget for the first quarter of Year 1:
  In anticipation of preparing a cash budget, the accountant needs to compute the expected monthly cash collections. Because the company is new and has no collection experience of its own, the accountant contacted an industry trade group and obtained the following industry collection data:
Collections on account:
70% in the month of sale
20% in the month following sale
6% in the second month following sale
Uncollectible accounts have averaged 4% of receivables. The company gives a 2% discount for payments made by customers during the month of sale.Required:
Prepare a schedule of cash collections from sales by month and in total for the first quarter.

Tableware Unlimited Company Plans to Sell China and Other Dining-Related