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 $165 million. In addition to this basic trend, the seasonal adjustments for the four quarters are 0, −$12, −$6, and $18 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 $84 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 shows all the formula and steps.

Answer 1

Particulars	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Sales (basic trend)	16,50,00,000.00	18,15,00,000.00	19,96,50,000.00	21,96,15,000.00
Seasonal Adjustment	0	-1,20,00,000.00	-60,00,000.00	1,80,00,000.00
Sales Projections	16,50,00,000	16,95,00,000.00	19,36,50,000.00	23,76,15,000.00
	Cash Collection computation
Particulars	Q1	Q2	Q3	Q4
Collected with in quarter[50%of prev	8,25,00,000.00	8,47,50,000.00	9,68,25,000.00	11,88,07,500.00
Ios quarter sales]
Collection from previous quarter-45%	75,600,000 NOTE	7,42,50,000.00	7,62,75,000.00	8,71,42,500.00
Cash Collection from sales	20,61,00,000.00	21,70,00,000.00	23,63,00,000.00	27,91,50,000.00
NOTE
Calculation of Sales of last quarter of previous year
= Account receivable balance of 84 million *100/50
=168,000,000