Credit Sales and Cash Collections. The following sales budget is given for Van Dyke Sales Co. for the second quarter of 20X1:
April May June Total
Sales budget $45,000 $50,000 $60,000 $155,000
Credit sales are collected as follows: 70 percent in month of sale, 20 percent in month following sale, 8 percent in second month following sale, and 2 percent uncollectible. The accounts receivable balance at the beginning of the second quarter is $18,000, of which $3,600 represents uncollected February sales, and $14,400 represents uncollected March sales.
Compute (a) the total sales for February and March, and (b) the budgeted cash collections from sales for each month February through June. Without prejudice to answer (a), assume February sales equal $40,000 and March sales equal $50,000.