Complete Question:
Crowley Company projects the following sales:
Jan Feb March
Cash Sales (25%) $5,000 $5,500 $6,000
Sales on account (75%) 15,000 15,500 18,000
Total Sales $20,000 $22,000 $24,000
Crowley collects sales on account in the month after the sale. The Accounts Receivable balance on January 1 is $13,500, which represents December's sales on account. Crowley projects the following cash receipts from customers:
Jan Feb March
Cash Sales (20%) $5,000 $5,500 $6,000
Sales on account (75%) 13,500 16,000 16,500
Total Sales $18,500 $20,500 $22,500
1. Recalculate cash receipts from customers if total sales remain the same but cash sales are only 20% of the total.
Answer:
Crowley Company
1. Recalculation of cash receipts from customers if total sales remain the same but cash sales are only 20% of the total:
Jan Feb March
Cash receipts from cash sales (20%) $4,000 $4,400 $4,800
Cash receipts from sales on account (80%) 14,400 16,000 17,600
Total receipts from sales $18,400 $20,400 $22,400
Explanation:
a) Calculations of Sales:
December sales = $13,500/0.75 = $18,000
Sales based on 20% cash and 80% on account:
Dec. Jan. Feb. March
Cash Sales (20%) $3,600 $4,000 $4,400 $4,800
Sales on account (80%) 14,400 16,000 17,600 19,200
Total Sales $18,000 $20,000 $22,000 $24,000
