Chapter 6 Exercise 2

2. Schedule of cash collections

Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the current year. Expected sales during the first three months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on account. Credit sales have the following collection pattern:

Collected in the month of sale 60%

Collected in the month following sale 35

Uncollectible 5

a. Prepare a schedule of cash collections for May through July.

b. Compute the expected balance in Accounts Receivable as of July 31.