Question

The Morning Jolt Coffee Company has projected the following quarterly sales amounts for the coming year: Q1 Q2 Q3 Q4 Sales $ 830 $ 860 $ 940 $ 970 a. Accounts receivable at the beginning of the year are $420. The company has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following (A negative answer should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.):

Answer 1

Answer  and Explanation:

a. Q1 Q2 Q3 Q4

Collection period is 45 days    

cash collection of Current quarter sales (Total days in quarter- cash collection period)/total days in quarter (90-45)90=1/2  

Beginning receivable (A) 420 415 430 470

Sales (B) 830 860 940 970

Cash collections © 835.00 845.00 900.00 955.00

420+(830*1/2) 415+(860*1/2) 430+(940*1/2) 470+(970*1/2)

Ending receivables (A+B-C) 415.00 430.00 470.00 485.00

b.

Collection period is 60 days    

cash collection of Current quarter sales (Total days in quarter- cash collection period)/total days in quarter (90-60)90=1/3  

Beginning receivable (A) 420 553.33 573.33 626.67

Sales (B) 830 860 940 970

Cash collections © 696.67 840.00 886.67 950.00

420+(830*1/3) 553.33+(860*1/3) 573.33+(940*1/3) 626.67+(970*1/3)

Ending receivables (A+B-C) 553.33 573.33 626.67 646.67

c .

Collection period is 30 days    

cash collection of Current quarter sales (Total days in quarter- cash collection period)/total days in quarter (90-30)90=2/3  

Beginning receivable (A) 420 276.67 286.67 313.33

Sales (B) 830 860 940 970

Cash collections © 973.33 850.00 913.33 960

420+(830*2/3) 276.67+(860*2/3) 286.67+(940*2/3) 313.33+(970*2/3)

Ending receivables (A+B-C) 276.67 286.67 313.33 323.33