Holley Ltd. is preparing its first-quarter monthly cash budget for the year. The following information is available about actual prior year sales and expected current year sales:

Tracing collections from prior year monthly sales and discussions with the credit manager helped develop a profile of collection behavior patterns. Of a given month's sales, 45 percent is typically collected in the month of sale. Because the company terms are 2 percent (end of month) net 30 , all collections within the month of sale are net of the 2 percent discount. Of a given month's sales, 30 percent is collected in the month following the sale. The remaining 25 percent is collected in the second month following the month of the sale. Bad debts are negligible and should be ignored.

a. Prepare a schedule of cash collections for Holley Ltd. for January, February, and March of the current year.

b. Calculate the Accounts Receivable balance at March 31, of the current year.

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November Prior Year $125,000 December Prior Year $145,000 January Current Year February Current Year March Current Year $109,000 $120,000 $122,000