Question

The sales budget for your company in the coming year is based on a quarterly growth rate of 10 percent with the first-quarter sales projection at $225.9 million. In addition to this basic trend, the seasonal adjustments for the four quarters are 0, −$16.9, −$8.9, and $21.9 million, respectively. Generally, 50 percent of the sales can be collected within the quarter and 45 percent in the following quarter; the rest of the sales are bad debt. The bad debts are written off in the second quarter after the sales are made. The beginning accounts receivable balance is $104.9 million. Assuming all sales are on credit, compute the cash collections from sales for each quarter. (Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)

Answer 1

	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Sales (with 10% growth rate)	225,900,000	248,490,000	273,339,000	300,672,900
Add: Seasonal Adjustment	$0	-16,900,000	-8,900,000	21,900,000
Net Sales	225,900,000	231,590,000	264,439,000	322,572,900

	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Collection within Quarter at 50% (50% of net sales)	112,950,000	115,795,000	132,219,500	161,286,450
Add: Collection from previous Quarter at 45% (45% of previous net sales)		101,655,000	104,215,500	118,997,550
Add: Collection of accounts receivable (104,900,000 * 0.45) / (1- 0.5)	94,410,000
Cash collection from Sales	207,360,000	217,450,000	236,435,000	280,284,000