The Suitter Company is a small company producing suit cases. The followings are the company’s credit sales for January to June. Month Credit Sales January $5000 February $10,000 March $12,000 April $10,500 May $14,000 June $16,000 Historically, customer have been paying 30% in the month of sale, 40% in the first month and the remaining 30% in the second month following the sale. Assume 90 days per calendar, that is 360 days per year. Construct the uncollected balances schedule for both quarters. Do both quarters show consistent payment patterns by the customers? Explain. If the next year’s sales for January=$10,000; February=$$15,000; and March=$20,000, given your calculations in part (a) what would be next year’s Account Receivables for these three months?
The Suitter Company is a small company producing suit cases. The followings are the company’s credit sales for January to June. Month Credit Sales January $5000 February $10,000 March $12,000 April $10,500 May $14,000 June $16,000 Historically, customer have been paying 30% in the month of sale, 40% in the first month and the remaining 30% in the second month following the sale. Assume 90 days per calendar, that is 360 days per year. Construct the uncollected balances schedule for both quarters. Do both quarters show consistent payment patterns by the customers? Explain. If the next year’s sales for January=$10,000; February=$$15,000; and March=$20,000, given your calculations in part (a) what would be next year’s Account Receivables for these three months?
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 1PROB
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The Suitter Company is a small company producing suit cases. The followings are the company’s credit sales for January to June.
Month Credit Sales
January $5000
February $10,000
March $12,000
April $10,500
May $14,000
June $16,000
Historically, customer have been paying 30% in the month of sale, 40% in the first month and the remaining 30% in the second month following the sale. Assume 90 days per calendar, that is 360 days per year.
- Construct the uncollected balances schedule for both quarters.
- Do both quarters show consistent payment patterns by the customers? Explain.
- If the next year’s sales for January=$10,000; February=$$15,000; and March=$20,000, given your calculations in part (a) what would be next year’s Account Receivables for these three months?
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