Chapter 8, Problem 21E

To determine

Prepare a schedule of cash receipts for May and June.

Explanation of Solution

Cash Receipts: The amount that a company expects to collect from customers during the month, quarter, or year is known as cash receipts.

Budgeted cash receipts: budgeted cash receipts are the cash inflows expected for a budgeted period.

Prepare a schedule of cash receipts for May and June:

RM Restaurant
Schedule of Cash Receipts
For the Months of May and June
Particulars	May	June
Cash sales:	5,850	7,280
VISA/Master card:	30,108	42,339
American Express	5,897	8,292
Total	$41,855	$57,911

Table (1)

Working note 1:

Calculate the revised sales estimates:

 For April:

$\begin{array}{c}\text{Revised sales estimates for April}\text{= }\left(\begin{array}{l}\text{Estimated sales for April}\\ \times \text{1}\text{.30}\end{array}\right)\\ \text{= }\left(\text{\$32,000}\times 1.30\right)\\ =\$41,600\end{array}$

For May:

$\begin{array}{c}\text{Revised sales estimates for May = }\left(\begin{array}{l}\text{Estimated sales for May}\\ \times \text{1}\text{.30}\end{array}\right)\\ \text{= }\left(\text{\$45,000}\times 1.30\right)\\ =\$58,500\end{array}$

For June:

$\begin{array}{c}\text{Revised sales estimates for June = }\left(\begin{array}{l}\text{Estimated sales for June}\\ \times \text{1}\text{.30}\end{array}\right)\\ \text{= }\left(\text{\$56,000}\times 1.30\right)\\ =\$72,800\end{array}$

Working note 2:

Calculate the amount of cash sales:

For May:

$\begin{array}{c}\text{Cash sales = }\left(\begin{array}{l}\text{Estimated sales for May}\\ \times \text{Cash sales percentage}\end{array}\right)\\ \text{= }\left(\text{\$58,500}\times 10\%\right)\\ =\$5,850\end{array}$

For June

$\begin{array}{c}\text{Cash sales = }\left(\begin{array}{l}\text{Estimated sales for June}\\ \times \text{Cash sales percentage}\end{array}\right)\\ \text{= }\left(\text{\$72,800}\times 10\%\right)\\ =\$7,280\end{array}$

Working note 3:

Calculate the amount of cash collection from VISA/Master card:

For May:

Step 1: Calculate the amount of May fee:

$\begin{array}{c}\text{May fee = }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for April}\\ \times \text{VISA/Master card percentage}\end{array}\right)\times \\ \text{ Percentage charge by credit card company}\end{array}\right]\\ \text{= }\left[\left(\text{\$41,600}\times \text{75\%}\right)\times 3.5\%\right]\\ =\$31,200\times 3.5\%\\ =\$1,092\end{array}$

Step 2: Calculate the amount of cash collected from VISA/Master card.

$\begin{array}{c}\begin{array}{l}\text{Cash collection from}\\ \text{ VISA/Master card }\end{array}\}\text{= }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for April}\\ \times \text{VISA/Master card percentage}\end{array}\right)\\ -\text{Amount of May fee}\end{array}\right]\\ \text{= }\left[\begin{array}{l}\left(\text{\$41,600}\times \text{75\%}\right)\\ -\$\text{1,092}\end{array}\right]\\ =\$31,200-\$\text{1,092}\\ \text{=\$30,108}\end{array}$

Calculate the amount of cash collection from VISA/Master card:

For June:

Step 1: Calculate the amount of June fee:

$\begin{array}{c}\text{June fee = }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for May}\\ \times \text{VISA/Master card percentage}\end{array}\right)\times \\ \text{ Percentage charge by credit card company}\end{array}\right]\\ \text{= }\left[\left(\text{\$58,500}\times \text{75\%}\right)\times 3.5\%\right]\\ =\$43,875\times 3.5\%\\ =\$1,536\end{array}$

Step 2: Calculate the amount of cash collected from VISA/Master card.

$\begin{array}{c}\begin{array}{l}\text{Cash collection from}\\ \text{ VISA/Master card }\end{array}\}\text{= }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for May}\\ \times \text{VISA/Master card percentage}\end{array}\right)\\ -\text{Amount of June fee}\end{array}\right]\\ \text{= }\left[\begin{array}{l}\left(\text{\$58,500}\times \text{75\%}\right)\\ -\$\text{1,536}\end{array}\right]\\ =\$43,875-\$\text{1,536}\\ \text{=\$42,339}\end{array}$

 Working note 4:

Calculate the amount of cash collection from American Express:

For May:

Step 1: Calculate the amount of May fee:

$\begin{array}{c}\text{May fee = }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for April}\\ \times \text{American express percentage}\end{array}\right)\times \\ \text{ Percentage charge by American express}\end{array}\right]\\ \text{= }\left[\left(\text{\$41,600}\times \text{15\%}\right)\times 5.5\%\right]\\ =\$6,240\times 5.5\%\\ =\$343\end{array}$

Step 2: Calculate the amount of cash collected from American Express.

$\begin{array}{c}\begin{array}{l}\text{Cash collection from}\\ \text{ VISA/Master card }\end{array}\}\text{= }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for April}\\ \times \text{VISA/Master card percentage}\end{array}\right)\\ -\text{Amount of May fee}\end{array}\right]\\ \text{= }\left[\begin{array}{l}\left(\text{\$41,600}\times \text{15\%}\right)\\ -\$\text{343}\end{array}\right]\\ =\$6,240-\$\text{343}\\ \text{=\$5,897}\end{array}$

Calculate the amount of cash collection from American Express:

For June:

Step 1: Calculate the amount of June fee:

$\begin{array}{c}\text{June fee = }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for May}\\ \times \text{American Express percentage}\end{array}\right)\times \\ \text{ Percentage charge by American Express}\end{array}\right]\\ \text{= }\left[\left(\text{\$58,500}\times 1\text{5\%}\right)\times 5.5\%\right]\\ =\$8,775\times 5.5\%\\ =\$483\end{array}$

Step 2: Calculate the amount of cash collected from American Express.

$\begin{array}{c}\begin{array}{l}\text{Cash collection from}\\ \text{American Express }\end{array}\}\text{= }\left[\begin{array}{l}\left(\begin{array}{l}\text{Estimated sales for May}\\ \times \text{American Express percentage}\end{array}\right)\\ -\text{Amount of June fee}\end{array}\right]\\ \text{= }\left[\begin{array}{l}\left(\text{\$58,500}\times \text{15\%}\right)\\ -\$\text{483}\end{array}\right]\\ =\$8,775-\$\text{483}\\ \text{=\$8,292}\end{array}$