25 Calculating Cash Collections The following is the sales budget for Freezing Snow plc for the first quarter of the year:

January February March Sales budget (£) 150,000 173,000 194,000 Credit sales are collected as follows:

• 65 per cent in the month of the sale

• 20 per cent in the month after the sale

• 15 per cent in the second month after the sale.

The accounts receivable balance at the end of the previous quarter was £57,000 (£41,000 of which was uncollected December sales).

(a) Compute the sales for November.

(b) Compute the sales for December.

(c) Compute the cash collections from sales for each month from January to March.

CHALLENGE