Furry Friends Supplies Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows: May $156,000 June 175,000 July 180,000 All sales are on account. Seventy percent of sales are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for May, June, and July. Enter all amounts as positive numbers.

Furry Friends Supplies Inc.

Cash collections Schedule

                                                               May              June            July

                                                                 $                   $                  $

Collections for May sales                   109,200           39,000          7,800

Collections for June sales                             0          122,500        43,750

Collections for July sales                            0                     0        126,000                

Total collections for the month          109,200         161,500         177,550

Explanation:

The collections in May represent 70 % of sales for May of $ 156,000

The collections in June represent 25 % of sales of May ($ 156,000) and 70 % of sales of June ( $ 175,000)

The collections in July represent 5 % of sales of May ( $156,000) 25 % of sales for June ($ 175,000) and 70 % of sales of July ( $ 180,000)