DeBerg Company has the following sales projections for its second and third quarters: April $100,000 May $120,000 June $140,000 July $160,000 August $150,000 September $130,000 Normal cash collection experience has been that 50% of sales are collected during the month of sale, 30% in the month following sale, and 15% in the second month following sale. The remaining 5% of sales is never collected. Prepare the schedule of cash collections for the third quarter, by month and in total.

The Schedule of Cash Collections is below:

Cash Collection from Sales     JULY        AUGUST   SEPTEMBER

50%  from month                    $80,000   $75,000  $65,000  

30% from previous month        $42,000   $48,000   $45,000  

15% from two previous months$18,000    $21,000  $24,000  

                                         $140,000  $144,000  $134,000  

Explanation:

The schedule of cash collection is attached herein.

July collections are as follows:

50% of $160,000 July + 30% of $140,000 June + 15% of $120, 000 May Sales

August collections are as follows:

50% of $150,000 August + 30% of $160,000 July + 15% of  $140,000 June Sales

September collections are as follows:

50% of $130,000 September + 30% of $150,000 August + 15% of $160,000 July Sales

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