How can I prepare a monthly sales report?

Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter?

• Peak sales for Midwest Productions, a wholesale distributor of leaf rakes, occur in August. These peak sales are shown in the company's budget for the third quarter given below: Budgeted sales (all on account) July $600,000 August $900,000 September $500,000 Total $2,000,000 From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. May sales totaled $430,000 and June sales totaled $540,000. 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter. 2. Assume that the company will prepare a budgeted balance sheet as of September 30. Compute the accounts receivable as of that date. I would greatly appreciate it if someone would be able to help. For some reason, I just can't seem to be able to figure it out. Thank you so much!

• Answer:

  PROB. 1: July Collection: July…600k * 20% = 120,000 June…540k * 70% = 378,000 May…430k * 10% = 43,000 July total…………...541,000 August Collection: Aug…900k * 20% = 180,000 July…600k * 70% = 420,000 June…540k * 10% = 54,000 August total….……..654,000 September Collection: Sept…500k * 20% = 100,000 Aug…900k * 70% = 630,000 July…600k * 10% = 60,000 September total…..790,000 3rd qtr total collection = $1,985,000 PROB. 2: This is asking for the remaining a/r balance after cash collections. Receivables from the months of July and earlier would be 100% collected as of September 30. That leaves August and September sales not 100% collected. As of September 30 [a/r sales minus collected]: Sept 20%...............500k – 100k = 400,000 Aug. 20%, 70%…...900k – (180k + 630k) = 90,000 A/R as of September 30 = $490,000 .