Question

	King Fisher Aviation has projected the following quarterly sales amounts for the coming year: Quarter 1 $750 Quarter 2 $820 Quarter 3 $790 Quarter 4 $950 Accounts Receivable at the beginning of the year are $350. King Fisher has a 30 day collection period. Calculate the cash collections in each of the four quarters by completing the following for each quarter. Beginning receivables Sales Cash Collections Ending Receivables Rework the Ending Receivables calculation using 45 and 60 days. Fill in the values in the spreadsheet. Input Area:
	Beginning A/R	$              350
a.	Collection period	30
b.	Collection period	45
c.	Collection period	60
		Q1	Q2	Q3	Q4
	Sales	$              750	$             820	$              790	$               950
	Output Area:
a.	30	-day collection period
		Q1	Q2	Q3	Q4
	Beginning receivables
	Sales
	Cash collections
	Ending receivables
b.	45
	Beginning receivables
	Sales
	Cash collections
	Ending receivables
c.	60
	Beginning receivables
	Sales
	Cash collections
	Ending receivables

Answer 1

45-day collection period implies all receivables outstanding from previous quarter are collected in the current quarter, and (90-45)/90 = 1/2 of current sales are collected

60-day collection period implies all receivables outstanding from previous quarter are collected in the current quarter, and (90-60)/90 = 1/3 of current sales are collected