Question

All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale. The following are budgeted sales data for the company:

	January	February	March	April
Total sales	$50,000	$60,000	$40,000	$30,000

1. What is the amount of cash that should be collected in March:
2. What would the Account Receivable Amount be on March 31^stBalance Sheet:

Answer 1

A	The amount of cash that should be collected in March is $51,000
	Computation is as follows
	35% collection in the month of Sale	$ 14,000.00	$40,000*35%
	45% collection from Feb Sale	$ 27,000.00	$60,000*45%
	20% collection from Jan Sale	$ 10,000.00	$50,000*20%
	Total collection in March	$ 51,000.00
B	Account Receivable amount would be on March 31st Balance sheet is $38,000
	20% Receivable from Feb Sale	$ 12,000.00	$60,000*20%
	65% Receivable from March Sale	$ 26,000.00	$40,000*65%
	Account Receivable as of Mar 31st	$ 38,000.00