Question

In: Finance

Based on the data below, with a collection period of 60 days what are cash collections...

Based on the data below, with a collection period of 60 days what are cash collections in Q2? (format $xxx as needed, no cents)

Beginning A/R $335

a. Collection Period 45

b. Collection Period 60

c. Collection Period 30

Sales:

Q1 $545

Q2 $598

Q3 $575

Q4 $795

Solutions

Expert Solution

A Collection period   = 45 days:
Q1 Q2 Q3 Q4
Beginning receivables 335 273 299 288
Sales 545 598 575 795
Cash collections 608 572 587 686
Ending receivables 273 299 288 398
*Ending receivables = Sales * 45 / 90
B Collection period   = 60 days:
Q1 Q2 Q3 Q4
Beginning receivables 335 363 399 383
Sales 545 598 575 795
Cash collections 517 562 591 648
Ending receivables 363 399 383 530
*Ending receivables = Sales * 60 / 90
C Collection period   = 30 days:
Q1 Q2 Q3 Q4
Beginning receivables 335 182 199 192
Sales 545 598 575 795
Cash collections 698 581 582 722
Ending receivables 182 199 192 265
*Ending receivables = Sales * 30 / 90
*Cash Collections = Beginning receivables + sales - Ending receivables

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