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Problem - Schedule of cash collections of accounts receivable
Innovative Office Inc. has "cash and carry" customers and credit customers. Innovative Office estimates that 30% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 75% pay their accounts in the month of sale, while the remaining 25% pay their accounts in the month following the month of sale. Projected sales for the first three months of 20Y4 are as follows:
January $1,200,000
February 1,450,000
March 1,600,000
The Accounts Receivable balance on December 31, 20Y3, was $180,000. Prepare a schedule of cash collections from sales for January, February, and March.
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