Preparing A Schedule Of Cash Collections On Accounts Receiva

Preparing a Schedule of Cash Collections on Accounts Receivable Kailua and Company

Prepare a schedule showing the cash expected in payments on accounts receivable in August and in September based on the expected sales billings for May through September, considering the payment percentages in the month of billing, the following month, and the second month following billing.

Sample Paper For Above instruction

In this paper, I will create a detailed schedule predicting the cash inflows from accounts receivable for Kailua and Company in August and September, based on their sales and collection patterns. The company’s billing expectations for May to September and their collection percentages are the core data for this schedule.

To accurately forecast cash collections, I will first analyze the sales data provided: May ($84,000), June ($100,800), July ($77,000), August ($87,600), and September ($90,000). Given the company's collection policy—that 20% of sales are paid in the month of billing, 50% in the following month, and 25% in the second month following billing—I will break down the collections for August and September accordingly.

Starting with August, the collections will consist of:

- 20% of August sales ($87,600), which amounts to $17,520.

- 50% of July sales ($77,000), amounting to $38,500.

- 25% of June sales ($100,800), amounting to $25,200.

Similarly, for September:

- 20% of September sales ($90,000), which is $18,000.

- 50% of August sales ($87,600), equivalent to $43,800.

- 25% of July sales ($77,000), totaling $19,250.

Adding these components, the total cash collections are:

- August: $17,520 + $38,500 + $25,200 = $81,220.

- September: $18,000 + $43,800 + $19,250 = $81,050.

This forecast helps Kailua and Company understand their expected cash inflows, enabling better cash flow management. It is important to note that these figures are based on collection percentages and expected sales data, which are subject to change due to customer payment behaviors or external economic factors.

In conclusion, the scheduled collections for August are projected at approximately $81,220, and for September at approximately $81,050, which assists in planning the company’s cash flow needs and ensuring liquidity for operational expenses and obligations.

References

  1. Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial Accounting (16th ed.). McGraw-Hill Education.
  2. Drury, C. (2020). Management and Cost Accounting (11th ed.). Cengage Learning.
  3. Shim, J. K., & Siegel, J. G. (2020). Financial Management and Analysis (2nd ed.). Barron’s Educational Series.
  4. Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2018). Introduction to Financial Accounting. Pearson.
  5. Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial Accounting. Wiley.
  6. Anthony, R. N., Hawkins, D. F., & Merchant, K. A. (2014). Accounting: Texts and Cases. McGraw-Hill Education.
  7. Riahi-Belkaoui, A. (2018). Financial Accounting Theory. Routledge.
  8. Harrison, W. T., Horngren, C. T., & Thomas, C. W. (2017). Financial & Managerial Accounting. Pearson.
  9. Benston, G. J. (2006). Performance Measurement and Public Sector Financial Management. Quorum Books.
  10. Libby, T., Libby, R., & Short, D. (2019). Financial Accounting. McGraw-Hill Education.

Related Assignments