Question

The Geller Company has projected the following quarterly sales amounts for the coming year: Q1 Q2 Q3 Q4 Sales $510 $540 $600 $750 a. Accounts receivable at the beginning of the year are $270. The company has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following: (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)

Answer 1

Answer:

The correct answer are $525, $525, $570 and $675 respectively.

Explanation:

According to the scenario, the computation of the given data are as follows:

Collection period = 45 days

Days in one quarter = 90 days

So, Amount collected during the quarter = ( 90 - 45) / 90 = 1/2 of current sales + Beginning Accounts receivables

So, we can calculated the cash collection as follows:

                                                  Q1        Q2      Q3         Q4

Beginning A/c. receivables     $270     $255      $270      $300

Sales                                     $510      $540      $600      $750

Cash Collections                     $525      $525      $570      $675

Ending A/c Balance             $255      $270      $300       $375

Note: Ending balance is the beginning balance for next quarter.