I have the answer but need help with the solution. This is the scenario: Sales on account are collected over a 3 month period 10% collected in the month of sale, 70% collected in the month following sale, and 18% collected in the second month following sale. The remaiining 2% in uncollectible. The company maintains a minium cash balance of 5k. The sales are as followed:

July August September
6500.00 5250.00 7400.00 Cash sales

20,000.00 30,000.00 40,000.00 Sales on acct
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26,500.00 35250.00 47,400.00 Total sales

Question: Prepare a schedule of expected cash collections for Sept.
Answers:
July 3,600.00 August 21,000.00 Sept 4,000.00
I am having a difficult time figuring out the acct receivable for July and the equation for the answers. Thanks!:)

Sep's cash collections will be the sum of four amounts...

Sep's cash sales;
10% of Sep's credit sales (sales on account);
70% of Aug's credit sales;
18% of Jul's credit sales.

In fact, you've already noted those last three amounts in your question. Can you take it from here?

Quote:

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Originally Posted by ArcSine

Sep's cash collections will be the sum of four amounts...

Sep's cash sales;
10% of Sep's credit sales (sales on account);
70% of Aug's credit sales;
18% of Jul's credit sales.

In fact, you've already noted those last three amounts in your question. Can you take it from here?

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Thank you so much I got it!!

;)