Exercise 7-3 Predicting future cash flow (LO 7-2)

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Shelter Products sells portable livestock shelters to hog producers in the Central and Midwest regions of the United States. The terms of sale require cash payment within 30 days, and most customers take full advantage of this payment option. Sales are somewhat seasonal, as indicated by the following table of monthly sales, accounts receivable, and cash receipts information. Accounts receivable figures are as of the month end, and December credit sales and cash collections are omitted for brevity.

	Dec		Jan		Feb		Mar		Apr		May		June
Credit sales			$	38,000	$	24,000	$	45,000	$	56,000	$	63,000	$	42,000
Accounts receivable	$	15,000		36,000		23,000		42,000		55,500		61,000		41,000
Cash collections				17,000		37,000		26,000		42,500		57,500		62,000

Requirement 1

Required:

1. Which accounting attributecurrent months credit sales or cash collectionsseems to better predict future (i.e., next months) cash collections?