Question 2(Total: 50 marks)

Fonsey Corporation, a merchandising company, has provided the following budget data:

Purchases

Sales

Month

$39,500

$69,000

January

47,200

65,900

February

37,500

61,200

March

54,000

79,850

April

59,500

72,600

May

Collections from customers are normally 60% in the month of sale, 17% in the month following the sale, and 20% in the second month following the sale. It is expected that the balance be uncollectible. Fonsey pays for purchases in the month following the purchase. Cash disbursements for expenses other than merchandise purchases are expected to be $13,800 for May. Fonsey's cash balance on May 1 was $27,500.

Required:

1.Compute the expected cash collections during May.

2.Compute the expected cash balance on May 31.

THIS IS FULL QUESTION