4. Sales Forecasts and Projected Cash Collections

Green Up Inc. manufactures a product that has peak sales in March of each year. The companys budgeted sales for the first quarter of 2014 are given below:

	January	February	March	Total
Budgeted Sales	$500,000	$700,000	$1,800,000	$3,000,000

The company is in the process of preparing a cash budget for the first quarter and must determine the expected cash collections by month. To this end, the following information has been assembled:

Collections on sales:

60% in month of sale (1st month)

30% in month following sale (2nd month)

8% the following month (3rd month)

2% uncollectible

The accounts receivable balance to start the year is $220,000, of which $40,000 represents uncollected November 2013 sales and $180,000 represents uncollected December 2013 sales.

Required: For the problem above, answer the following on a separate sheet of paper:

1. What were the total sales for November 2013? _____________

2. What were the total sales for December 2013? _____________

3. Prepare a schedule showing the budgeted cash collections from sales, by month and in total for the first quarter of 2014.

4. Indicate the balance of the Accounts Receivable account at March 31, 2014.