Peak sales for Northern Lift a wholesale distributor of snow
Peak sales for Northern Lift, a wholesale distributor of snow shovels, occur in November. The company’s sales budget for the fourth quarter showing these peak sales is given below:
From past experience, the company has learned that 25% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can be ignored. August sales totalled $70,000, and September sales totalled $180,000.
Required:
1. Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter.
2 Assume that the company will prepare a budgeted balance sheet as of September 30. Compute the accounts receivable as of that date.
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