Q2. Chelsea Co. has the following sales budget for the next six months:

April $100,000 July $106,000

May $120,000 August $98,000

June $115,000 September $90,000

The company has historically made 60% of their sales on credit. Credit sales are collected in the following pattern: 40% one month after the sale and 59% two months after the sale. Credit sales paid the month after sale are granted a 2% discount. Cash sales are granted a 5% discount. Uncollectibles are written off the month of sale.

A. Prepare a cash collections schedule for August. Round your answers to nearest dollar.

B. If the Accounts Receivable balance on August 1^st is $103,674, what is the budgeted Accounts Receivable balance on August 31^st?

Bonus: Based on the credit collection pattern, what should the September 30^th Accounts Receivable balance be?

Check Figures:

Q2.

A. Net cash sales = $37,240; Net credit collections = $65,641; Total cash collections = $102,881

B. AR balance, 8/31= $95,736

Bonus AR balance, 9/30 = $88,152