Acc206 Principles of Accounting: Week 4 Chapter 6 Exercise 2 - Sugarland Company

Acc206 Principles of Accounting

Week 4 Assignment - Chapter 6 and 7 Problems
Chapter 6 Exercise 2

2. Schedule of cash collections
Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the current year.

Expected sales during the first three months of activity are:
May, $60,000; June, $80,000; and July, $85,000.
Thirty percent of all sales are for cash; the remaining 70% are on account.
Credit sales have the following collection pattern:
Collected in the month of sale 60%
Collected in the month following sale 35%
Uncollectible 5%

a. Prepare a schedule of cash collections for May through July.
b. Compute the expected balance in Accounts Receivable as of July 31.
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