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Bohemian Interior Design has projected the following quarterly sales. The accounts receivable at the beginning of...

  1. Bohemian Interior Design has projected the following quarterly sales. The accounts receivable at the beginning of the year is $1,030,000 and the collection period is 58 days. What are collections for the first quarter and second quarters? (5 points)

Q1

Q2

Q3

Q4

Sales

$

1,705

,000

$

1,765

,000

$

2,115

,000

$

2,135

,000

Solutions

Expert Solution

Collection Period = 58 days

Collection in Current Quarter’s Sales = (90 - Collection Period) / 90
Collection in Current Quarter’s Sales = (90 - 58) / 90
Collection in Current Quarter’s Sales = 32 / 90
Collection in Current Quarter’s Sales = 16 / 45

Collection from Previous Quarter’s Sales = 1 - Collection in Current Quarter’s Sales
Collection from Previous Quarter’s Sales = 1 - 16 / 45
Collection from Previous Quarter’s Sales = 29 / 45

Collection in 1st Quarter = Beginning Accounts Receivable + (16 / 45) * 1st Quarter’s Sales
Collection in 1st Quarter = $1,030,000 + (16 / 45) * $1,705,000
Collection in 1st Quarter = $1,030,000 + $606,222
Collection in 1st Quarter = $1,636,222

Collection in 2nd Quarter = (29 / 45) * 1st Quarter’s Sales + (16 / 45) * 2nd Quarter’s Sales
Collection in 2nd Quarter = (29 / 45) * $1,705,000 + (16 / 45) * $1,765,000
Collection in 2nd Quarter = $1,098,778 + $627,556
Collection in 2nd Quarter = $1,726,334

jeff jeffy answered 2 years ago
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