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

\begin{tabular}{lr}
March & \[tex]$43,000 \\
April & \$[/tex]49,000 \\
May & \[tex]$38,000 \\
June & \$[/tex]47,000 \\
July & \[tex]$55,000 \\
August & \$[/tex]57,000
\end{tabular}

Sales in January and February were \[tex]$46,000 and \$[/tex]45,000, respectively. Experience has shown that of total sales, 10 percent are uncollectible, 35 percent are collected in the month of sale, 45 percent are collected in the following month, and 10 percent are collected two months after sale.

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

\begin{tabular}{|c|c|c|c|c|c|c|c|c|}
\hline
\multicolumn{9}{|c|}{Watt's Lighting Stores} \\
\hline
\multicolumn{9}{|c|}{Cash Receipts Schedule} \\
\hline
& January & February & March & April & May & June & July & August \\
\hline
\multicolumn{9}{|l|}{Credit sales} \\
\hline
\multicolumn{9}{|l|}{Collections:} \\
\hline
In month of sale & & & & & & & & \\
\hline
One month after sale & & & & & & & & \\
\hline
Two months after sale & & & & & & & & \\
\hline
Total cash receipts & & & & & & & & \\
\hline
\end{tabular}



Answer :

GinnyAnswer
Let's break down the cash receipts schedule and compute the monthly receipts step by step.

### Given Data:
1. Sales Projections:
- January: \[tex]$46,000 - February: \$[/tex]45,000
- March: \[tex]$43,000 - April: \$[/tex]49,000
- May: \[tex]$38,000 - June: \$[/tex]47,000
- July: \[tex]$55,000 - August: \$[/tex]57,000

2. Collection Percentages:
- 10% uncollectible
- 35% collected in the month of sale
- 45% collected one month after sale
- 10% collected two months after sale

### Step-by-Step Calculation:

#### Collections in the Month of Sale:
- For March: [tex]\( \$43,000 \times 0.35 = \$15,050 \)[/tex]
- For April: [tex]\( \$49,000 \times 0.35 = \$17,150 \)[/tex]
- For May: [tex]\( \$38,000 \times 0.35 = \$13,300 \)[/tex]
- For June: [tex]\( \$47,000 \times 0.35 = \$16,450 \)[/tex]
- For July: [tex]\( \$55,000 \times 0.35 = \$19,250 \)[/tex]
- For August: [tex]\( \$57,000 \times 0.35 = \$19,950 \)[/tex]

#### Collections One Month After Sale:
- For February (collected in March): [tex]\( \$45,000 \times 0.45 = \$20,250 \)[/tex]
- For March (collected in April): [tex]\( \$43,000 \times 0.45 = \$19,350 \)[/tex]
- For April (collected in May): [tex]\( \$49,000 \times 0.45 = \$22,050 \)[/tex]
- For May (collected in June): [tex]\( \$38,000 \times 0.45 = \$17,100 \)[/tex]
- For June (collected in July): [tex]\( \$47,000 \times 0.45 = \$21,150 \)[/tex]
- For July (collected in August): [tex]\( \$55,000 \times 0.45 = \$24,750 \)[/tex]

#### Collections Two Months After Sale:
- For January (collected in March): [tex]\( \$46,000 \times 0.10 = \$4,600 \)[/tex]
- For February (collected in April): [tex]\( \$45,000 \times 0.10 = \$4,500 \)[/tex]
- For March (collected in May): [tex]\( \$43,000 \times 0.10 = \$4,300 \)[/tex]

#### Total Monthly Cash Receipts:
- March:
[tex]\[ \$15,050 \quad (\text{in month collection}) \][/tex]
[tex]\[ + \$20,250 \quad (\text{one month after February}) \][/tex]
[tex]\[ + \$4,600 \quad (\text{two months after January}) \][/tex]
[tex]\[ = \$39,900 \][/tex]

- April:
[tex]\[ \$17,150 \quad (\text{in month collection}) \][/tex]
[tex]\[ + \$19,350 \quad (\text{one month after March}) \][/tex]
[tex]\[ + \$4,500 \quad (\text{two months after February}) \][/tex]
[tex]\[ = \$41,000 \][/tex]

- May:
[tex]\[ \$13,300 \quad (\text{in month collection}) \][/tex]
[tex]\[ + \$22,050 \quad (\text{one month after April}) \][/tex]
[tex]\[ + \$4,300 \quad (\text{two months after March}) \][/tex]
[tex]\[ = \$39,650 \][/tex]

- June:
[tex]\[ \$16,450 \quad (\text{in month collection}) \][/tex]
[tex]\[ + \$17,100 \quad (\text{one month after May}) \][/tex]
[tex]\[ = \$33,550 \][/tex]

- July:
[tex]\[ \$19,250 \quad (\text{in month collection}) \][/tex]
[tex]\[ + \$21,150 \quad (\text{one month after June}) \][/tex]
[tex]\[ = \$40,400 \][/tex]

- August:
[tex]\[ \$19,950 \quad (\text{in month collection}) \][/tex]
[tex]\[ + \$24,750 \quad (\text{one month after July}) \][/tex]
[tex]\[ = \$44,700 \][/tex]

### Final Cash Receipts Schedule:
\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|}
\hline \multicolumn{10}{|c|}{ Watt's Lighting Stores } \\
\hline \multicolumn{10}{|c|}{ Cash Receipts Schedule } \\
\hline & January & February & March & April & May & June & July & August & Total \\
\hline \multicolumn{10}{|l|}{ Credit sales } \\
\hline \multicolumn{10}{|l|}{ Collections: } \\
\hline In month of sale & & & \[tex]$15,050 & \$[/tex]17,150 & \[tex]$13,300 & \$[/tex]16,450 & \[tex]$19,250 & \$[/tex]19,950 & \[tex]$168,300 \\ \hline One month after sale & & & \$[/tex]20,250 & \[tex]$19,350 & \$[/tex]22,050 & \[tex]$17,100 & \$[/tex]21,150 & \[tex]$24,750 & \$[/tex]124,700 \\
\hline Two months after sale & & & \[tex]$4,600 & \$[/tex]4,500 & \[tex]$4,300 & & & & \$[/tex]13,400 \\
\hline Total cash receipts & & & \[tex]$39,900 & \$[/tex]41,000 & \[tex]$39,650 & \$[/tex]33,550 & \[tex]$40,400 & \$[/tex]44,700 & \$239,200 \\
\hline
\end{tabular}

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