Question

National Beverage Company anticipates the following​ first-quarter sales for​ 2015: ​$1,874,000​(January), $1,592,000​(February), and ​$2,142,000 ​(March). It posted the following sales figures for the last quarter of ​2014: $1,928,000​(October), ​$2,052,000​(November), and ​$2,192,000​(December). The company sells 45% of its products on​ credit; 55% are cash sales. The company collects credit sales as​ follows: 31% in the following​ month, 51% two months​ later, and 17% three months​ later, with 1% defaults. What are the anticipated cash inflows for the first quarter of​ 2015?

Of the $1,928,000 October​ sales,The amount collected in October is

November:

December

​

Answer 1

	January	February	March
Cash sale (55%)	$1030700	$875600	$1178100
Collection of credit sales;
Collection from October’s sales	$147492	-------	-------
Collection from November’s sales	$470934	$156978	-------
Collection from December’s sales	$305784	$503064	$167688
Collection from January’s sales	------	$261423	$430083
Collection from February’s sales	------	--------	$222084
Total anticipated cash inflows	$1954910	$1797065	$1997955

Working Note;

1. Collection from October’s sales in January;

($1928000 * 0.45 * 0.17) = $147492

2. Collection from November’s sales in January;

($2052000 * 0.45 * 0.51) = $470934

3. Collection from November’s sales in February;

($2052000 * 0.45 * 0.17) = $156978

4. Collection from December sales in January;

($2192000 * 0.45 * 0.31) = $305784

5. Collection from December’s sales in February;

($2192000 * 0.45 * 0.51) = $503064

6. Collection from December’s sales in March;

($2192000 * 0.45 * 0.17) = $167688

7. Collection from January’s sales in February;

($1874000 * 0.45 * 0.31) = $261423

8. Collection from January’s sales in March;

($1874000 * 0.45 * 0.51) = $430083

9. Collection from February’s sales in March;

($1592000 * 0.45 * 0.31) = $222084