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
