Question

The Morning Jolt Coffee Company has projected the following quarterly sales amounts for the coming year:

  Q1   Q2   Q3   Q4
  Sales $ 710 $ 740 $ 820 $ 900

a.

Accounts receivable at the beginning of the year are $290. The company has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.):

Q1 Q2 Q3 Q4
  Beginning receivables $ $ $ $
  Sales 710.00 740.00 820.00 900.00
  Cash collections





  Ending receivables $ $ $ $

b.

Recalculate the cash collections with a collection period of 60 days. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.)

Q1 Q2 Q3 Q4
  Beginning receivables $ $ $ $
  Sales 710.00 740.00 820.00 900.00
  Cash collections





  Ending receivables $ $ $ $

c.

Recalculate the cash collections with a collection period of 30 days. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.)

Q1 Q2 Q3 Q4
  Beginning receivables $ $ $ $
  Sales 710.00 740.00 820.00 900.00
  Cash collections





  Ending receivables $ $ $ $

Answer 1

Beginning receivables are provided for the first quarter as 290 for all the subsequent quarters we will use ending receivables of the previous quarter as Beginning receivables.

Since we are calculating the collections quarterly we will calculate the cash collection as:-

Cash Collections = Beginning Receivables + sales*(no. of days in Qtr-collection period)/no. of days in the Qtr

formula for 1st quarter would be '= 290 + 710*(90-45)/90 = 645 and so on for rest of the quarters

and finally, we calculate Ending receivables = Beginning receivables + Sales – Cash collections

now we can calculate all the numbers required as:-

cash collections

	Q1	Q2	Q3	Q4
Beginning receivables	290	355	370	410
Sales	710	740	820	900
Cash collections	-645	-725	-780	-860
Ending receivables	355	370	410	450

b)

cash collections

	Q1	Q2	Q3	Q4
Beginning receivables	290	473.33	493.33	546.67
Sales	710	740	820	900
Cash collections	-526.67	-720	-766.67	-846.67
Ending receivables	473.33	493.33	546.67	600

c)

cash collections

	Q1	Q2	Q3	Q4
Beginning receivables	290	236.67	246.67	273.33
Sales	710	740	820	900
Cash collections	-763.33	-730	-793.33	-873.33
Ending receivables	236.67	246.67	273.33	300