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Kendall Law Firm has found from experience that 30 percent of its services are for cash. The remaining 70 percent are on credit. An aging schedule for accounts receiv- able reveals the following pattern:
a. Ten percent of fees on credit are paid in the month service is rendered.
b. Seventy percent of fees on credit are paid in the month following the legal service.
c. Seventeen percent of fees on credit are paid in the second month following the legal service.
d. Three percent of fees on credit are never collected.
Fees (on credit) that have not been paid until the second month following performance of the legal service are considered overdue and are subject to a 2 percent late charge.
Kendall has developed the following forecast of fees:
May
$228,000
June
255,000
July
204,000
August
240,000
September
300,000
Prepare a schedule of cash receipts for August and September.
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