Big Air Board Company, a global manufacturer and distributor of both surfboards and snowboards, is in a seasonal business. Although surfboard sales are only mildly seasonal, the snowboard sales are very seasonal, driven by peak demand in the first and fourth calendar quarters of each year.
The following table gives the firm's monthly sales for the immediate past quarter (October through December 2009) and its forecast monthly sales for the coming year (calendar-year 2010).
The firm extends 2/10 net 30, EOM credit terms to all customers. It collects 98 percent of its receivables; the other 2 percent is typically written off as bad debts.
Big Air Board's historic collection pattern, which is expected to continue through 2010, is 5 percent collected in the month of the sale, 65 percent collected in the first month following the sale, and 28 percent collected in the second month following the sale.
Using the data given, calculate the payment pattern of Big Air Board's accounts receivable, and comment on the firm's monthly collections during calendar-year 2010.