Question

qs 20-19 (algo) schedule of cash receipts lo p2

music world reports the following budgeted sales: august, $180,000, and september, $210,000. cash sales are 60% of total sales, and all credit sales are collected in the month following the sale. prepare a schedule of cash receipts from sales for september.

Explanation:

Identify given values and parameters

We are given the following information from the problem statement:

• Budgeted sales for August: \(\$180,000\)
• Budgeted sales for September: \(\$210,000\)
• Cash sales percentage: \(60\%\) of total sales
• Credit sales percentage: \(100\% - 60\% = 40\%\) of total sales
• Collection pattern for credit sales: Collected entirely in the month following the sale.

We need to prepare a schedule of cash receipts from sales for September.

Calculate cash sales for September

Cash sales are collected in the month of sale.
Using the Cash Sales Collection concept:

$$ \text{September Cash Sales} = \text{September Sales} \times 60\% $$

$$ \text{September Cash Sales} = \$210,000 \times 0.60 = \$126,000 $$

Calculate credit sales collected in September

Credit sales are collected in the month following the sale. Therefore, credit sales from August are collected in September.
Using the Credit Sales Collection concept:

$$ \text{August Credit Sales} = \text{August Sales} \times (100\% - 60\%) $$

$$ \text{August Credit Sales} = \$180,000 \times 0.40 = \$72,000 $$

These credit sales of \(\$72,000\) from August are received as cash in September.

Calculate total cash receipts for September

Using the Cash Receipts Schedule concept, we sum the cash collections received in September:

$$ \text{Total Cash Receipts} = \text{September Cash Sales} + \text{August Credit Sales Collected} $$

$$ \text{Total Cash Receipts} = \$126,000 + \$72,000 = \$198,000 $$

Answer:

MUSIC WORLD <br> Schedule of Cash Receipts from Sales <br> September
Cash receipts from:
Cash sales	\$ 126,000
Collections of August credit sales	\$ 72,000
Total cash receipts	\$ 198,000