Sky Corp. reported the following information:

Month

Sales

Purchases

July

$30,000

$12,000

August

$40,000

$15,000

September

$45,000

$18,000

October

$60,000

$25,000

Accounts receivable are collected from customers in the following manner:

Month of sale (2% cash discount) 40%

Month following sale 40%

Two months following sale 18%

Amount uncollectible 2%

Of accounts payable for purchases, 40% are paid in the month of purchase, and the remainder are paid in the month following the purchase.

Required:

a) Prepare a summary of collections for September and October. (4.5 marks)

b) Prepare a summary of payments for September and October. (2 marks)

c) Determine the balance in accounts receivable, net of allowance for uncollectible accounts, and the balance in accounts payable at the end of October. (2 marks)