a)
To determine: The cash collections for all the four quarters, when the collection period is 45days.
Introduction:
Cash collection is an amount which is recovered from an individual or business. It is a function of a particular company’s accounts receivables.
a)
Answer to Problem 12QP
Solution:
The cash collection of Quarter 1(Q1) is $5,850.
The cash collection of Quarter 2(Q2) is $6,750.
The cash collection of Quarter 3(Q3) is $7,150.
The cash collection of Quarter 4(Q4) is $6,300.
Explanation of Solution
Given information:
The collection period is 45 days, Sales of Q1 is $6,100, Sales of Q2 is $7,400, Sales of Q3 is $6,900, and Sales of Q4 is $5,700. The beginning accounts receivable is $2,800.
The formula to calculate the cash collection:
Compute the cash collection for each four quarters:
Note: The 45 days collection period indicates that the entire receivables which are outstanding will be collected in the current quarter.
Compute the total collection period:
Hence, the half of current quarter’s sales will be collected for 45 days of collection period.
Compute the ending accounts receivable of Quarter 1(Q1):
Hence, the ending accounts receivable of Q1 is $3,050.
Compute the cash collection for Q1:
Hence, the cash collection for Q1 is $5,850.
Compute the ending accounts receivable for Q2:
Hence, the ending accounts receivable of Q2 is $3,700.
Compute the cash collection for Q2:
Note: The beginning accounts receivable of Q2 will be ending accounts receivable of Q1.
Hence, the cash collection for Q2 is $6,750.
Compute the ending accounts receivable for Q3:
Hence, the ending accounts receivable of Q3 is $3,450.
Compute the cash collection for Q3:
Note: The beginning accounts receivable of Q3 will be ending accounts receivable of Q2.
Hence, the cash collection for Q3 is $7,150.
Compute the ending accounts receivable for Q 4:
Hence, the ending accounts receivable is $2,850.
Compute the cash collection for Q4:
Note: The beginning accounts receivable of Q4 will be ending accounts receivable of Q3.
Hence, the cash collection for Q4 is $6,300.
b)
To determine: The cash collections for each four quarters, when the collection period is 60 days.
Introduction:
Cash collection is an amount which is recovered from an individual or business. It is a function of a particular company’s accounts receivables.
b)
Answer to Problem 12QP
Solution:
The cash collection of Quarter 1(Q1) is $6,866.67.
The cash collection of Quarter 2(Q2) is $6,966.66.
The cash collection of Quarter 3(Q3) is $7,066.67.
The cash collection of Quarter 4(Q4) is $6,100.
Explanation of Solution
Given information:
The collection period is 60 days, Sales of Q1 is $6,100, Sales of Q2 is $7,400, Sales of Q3 is $6,900, and Sales of Q4 is $5,700.
Compute the cash collection for each four quarters:
Note: The 60 days collection period indicates that the entire receivables which are outstanding will be collected in the current quarter.
Compute the total collection period:
Hence, the one-third of the current quarter’s sales will be collected for 60 days of collection period.
Compute the ending accounts receivable of Quarter 1(Q1):
Hence, the ending accounts receivable is $2,033.33.
Compute the cash collection for Q1:
Hence, the cash collection for Q1 is $6,866.67.
Compute the ending accounts receivable for Q2:
Hence, the ending accounts receivable of Q2 is $2,466.67.
Compute the cash collection for Q2:
Note: The beginning accounts receivable of Q2 will be ending accounts receivable of Q1.
Hence, the cash collection for Q2 is $6,966.66.
Compute the ending accounts receivable for Q3:
Hence, the ending accounts receivable of Q3 is $2,300
Compute the cash collection for Q3:
Note: The beginning accounts receivable of Q3 will be ending accounts receivable of Q2.
Hence, the cash collection for Q3 is $7,066.67.
Compute the ending accounts receivable for Q4:
Hence, the ending accounts receivable of Q4 is $1,900.
Compute the cash collection for Q4:
Note: The beginning accounts receivable of Q4 will be ending accounts receivable of Q3.
Hence, the cash collection for Q4 is $6,100.
c)
To determine: The cash collection for each four quarters, when the collection period is 30 days.
Introduction:
Cash collection is an amount which is recovered from an individual or business. It is a function of a particular company’s accounts receivables.
c)
Answer to Problem 12QP
Solution:
The cash collection of Quarter 1(Q1) is $4,833.33.
The cash collection of Quarter 2(Q2) is $6,533.34.
The cash collection of Quarter 3(Q3) is $7,233.33.
The cash collection of Quarter 4(Q4) is $6,500.
Explanation of Solution
Given information:
The collection period is 30 days, Sales of Q1 is $6,100, Sales of Q2 is $7,400, Sales of Q3 is $6,900, and Sales of Q4 is $5,700.
Compute the cash collection for each four quarters:
Note: The 30 days collection period indicates that the entire receivables which are outstanding will be collected in the current quarter.
Compute the total collection period:
Hence, the two-third of the current quarter’s sales will be collected for 30 days of collection period.
Compute the ending accounts receivable of Quarter 1(Q1):
Hence, the ending accounts receivable is $4,066.67
Compute the cash collection for Q1:
Hence, the cash collection for Q1 is $4,833.33.
Compute the ending accounts receivable for Q2:
Hence, the ending accounts receivable of Q2 is $4,933.33
Compute the cash collection for Q2:
Note: The beginning accounts receivable of Q2 will be ending accounts receivable of Q1.
Hence, the cash collection for Q2 is $6,533.34.
Compute the ending accounts receivable for Q3:
Hence, the ending accounts receivable of Q3 is $4,600
Compute the cash collection for Q3:
Note: The beginning accounts receivable of Q3 will be ending accounts receivable of Q2.
Hence, the cash collection for Q3 is $7,233.33.
Compute the ending accounts receivable for Q 4:
Hence, the ending accounts receivable is $3,800.
Compute the cash collection for Q4:
Note: The beginning accounts receivable of Q4 will be ending accounts receivable of Q3.
Hence, the cash collection for Q4 is $6,500.
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