Watt’s Lighting Stores made the following sales projection for the next six months. All sales are credit sales.

March	\(35,000
April	41,000
May	30,000
June	39,000
July	47,000
August	49,000

Sales in January and February were \)38,000 and $37,000, respectively. Experience has shown that of total sales, 10 percent are uncollectible, 30 percent are collected in the month of sale, 40 percent are collected in the following month, and 20 percent are collected two months after sale.

Prepare a monthly cash receipts schedule for the firm for March through

August.

Of the sales expected to be made during the six months from March through August, how much will still be uncollected at the end of August? How much of this is expected to be collected later?

$\begin{array}{rcl}\mathrm{Cash}\mathrm{receipt}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{march}\times 30\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{february}\times 40\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{january}\times 20\%\right)\\ & =& \left(\$35,000\times 30\%\right)+\left(\$37,000\times 40\%\right)+\left(\$38,000\times 20\%\right)\\ & =& \$32,900\end{array}$

$\begin{array}{rcl}\mathrm{Cash}\mathrm{receipt}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{april}\times 30\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{march}\times 40\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{february}\times 20\%\right)\\ & =& \left(\$41,000\times 30\%\right)+\left(\$35,000\times 40\%\right)+\left(\$37,000\times 20\%\right)\\ & =& \$33,700\end{array}$

$\begin{array}{rcl}\mathrm{Cash}\mathrm{receipt}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{may}\times 30\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{april}\times 40\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{march}\times 20\%\right)\\ & =& \left(\$30,000\times 30\%\right)+\left(\$41,000\times 40\%\right)+\left(\$35,000\times 20\%\right)\\ & =& \$32,400\end{array}$

$\begin{array}{rcl}\mathrm{Cash}\mathrm{receipt}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{june}\times 30\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{may}\times 40\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{april}\times 20\%\right)\\ & =& \left(\$39,000\times 30\%\right)+\left(\$30,000\times 40\%\right)+\left(\$41,000\times 20\%\right)\\ & =& \$31,900\end{array}$

$\begin{array}{rcl}\mathrm{Cash}\mathrm{receipt}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{july}\times 30\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{june}\times 40\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{may}\times 20\%\right)\\ & =& \left(\$47,000\times 30\%\right)+\left(\$39,000\times 40\%\right)+\left(\$30,000\times 20\%\right)\\ & =& \$35,700\end{array}$

$\begin{array}{rcl}\mathrm{Cash}\mathrm{receipt}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{august}\times 30\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{july}\times 40\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{june}\times 20\%\right)\\ & =& \left(\$49,000\times 30\%\right)+\left(\$47,000\times 40\%\right)+\left(\$39,000\times 20\%\right)\\ & =& \$41,300\end{array}$

$\begin{array}{rcl}\mathrm{Uncollected}\mathrm{amount}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{march}+\mathrm{Sale}\mathrm{of}\mathrm{april}+\mathrm{Sale}\mathrm{of}\mathrm{may}+\mathrm{Sale}\mathrm{of}\mathrm{june}+\mathrm{Sale}\mathrm{of}\mathrm{july}+\mathrm{Sale}\mathrm{of}\mathrm{august}\right)\times 10\%\\ & =& \left(\$35,000+\$41,000+\$30,000+\$39,000+\$47,000+\$49,000\right)\times 10\%\\ & =& \$24,100\end{array}$

$\begin{array}{rcl}\mathrm{Amount}\mathrm{to}\mathrm{be}\mathrm{collected}& =& \left(\mathrm{Sale}\mathrm{of}\mathrm{july}\times 20\%\right)+\left(\mathrm{Sale}\mathrm{of}\mathrm{august}\times \left(40\%+20\%\right)\right)\\ & =& \left(\$47,000\times 20\%\right)+\left(\$49,000\times 60\%\right)\\ & =& \$38,800\end{array}$