Rich Company's Experience Shows That 20% of Its Sales Are

Essay

Rich Company's experience shows that 20% of its sales are for cash and 80% are on credit.An analysis of credit sales shows that 50% are collected in the month following the sale, 45% are collected in the second month, and 5% prove to be uncollectible.Calculate items (1)through (10)below:
$$\begin{array}{l}\begin{array} { c c c c } &\text { August } & \text { September } & \text { October } & \text { November } \\\text { Sales }&\$ 500,000 & \$ 525,000 & \$ 535,000 & \$ 560,000\end{array}\end{array}$$ $\begin{array}{lll}& \text { October } & \text { November } \\\text { Receipts from cash sales } & \text { (1) }\underline { \quad\quad\quad\quad } & \text { (6) } \underline { \quad\quad\quad\quad } \\\text { Collections from August credit sales } & \text { (2) }\underline { \quad\quad\quad\quad } & \text { (7) } \underline { \quad\quad\quad\quad } \\\text { Collections from September credit } & \text { (3) }\underline { \quad\quad\quad\quad } & \text { (8) } \underline { \quad\quad\quad\quad } \\\text { sales } \\\text { Collections from October credit sales } & \text { (4) }\underline { \quad\quad\quad\quad } & \text { (9) } \underline { \quad\quad\quad\quad } \\\text { Total cash collections during the } & \text { (5) }\underline { \quad\quad\quad\quad } & \text { (10) } \underline { \quad\quad\quad\quad } \\\text { month }\\\end{array}$