Concept explainers
a)
To determine: The cash collection for each four quarters, when the collection period is 45days.
Introduction:
Cash collection is the amount collected through business. It is a task of accounts receivables.
Average cash collection period is the number of days taken to collect the cash from the customers.
a)
Answer to Problem 12QP
The cash collection for each quarters are Quarter 1 is $4,050, Quarter 2 is $4,750, Quarter 3 is $5,000 and Quarter 4 is $4,400.
Explanation of Solution
Given information:
Accounts receivable at the beginning of the year is $1900, and the collection period is 45 days.
Compute the cash collection for each four quarters:
Note: All the receivables, which are outstanding, will be collected in the current year.
Compute the ending receivables for quarter 1:
Therefore, the ending receivable will be half of the current year sales.
Hence, the ending receivables are $2,150.
Compute the cash collection for quarter 1:
Hence, the cash collected for the quarter 1 is $4,050.
Compute the ending receivables for quarter 2:
Hence, the ending receivables are $2,600.
Compute the cash collection for quarter 2:
Hence, the cash collected for the quarter 2 is $4,750.
Compute the ending receivables for quarter 3:
Hence, the ending receivables are $2,400.
Compute the cash collection for quarter 3:
Hence, the cash collected for the quarter 1 is $5,000.
Compute the ending receivables for quarter 4:
Hence, the ending receivables are $2,000.
Compute the cash collection for quarter 4:
Hence, the cash collected for the quarter 1 is $4,400.
b)
To determine: The cash collection for each four quarters, when the collection period is 60 days.
b)
Answer to Problem 12QP
The cash collection for each quarter: Quarter 1 is $4,767, Quarter 2 is $4,900, Quarter 3 is $4,933, and Quarter 4 is $4,267.
Explanation of Solution
Given information:
Accounts receivables at the beginning of the year are $1,900 and the collection period is 60 days.
Compute the cash collection for each four quarters:
Note: All the receivables, which are outstanding, will be collected in the current year.
Compute the ending receivables for quarter 1:
Therefore, the ending receivable will be half of the current year sales.
Compute ending receivables for quarter 1:
Hence, the ending receivables are $1,433.
Compute the cash collection for quarter 1:
Hence, the cash collected for the quarter 1 is $4,767.
Compute ending receivables for quarter 2:
Hence, the ending receivables are $1,733.33.
Compute the cash collection for quarter 2:
Hence, the cash collected for the quarter 2 is $4,900.
Compute the ending receivables for quarter 3:
Hence, the ending receivables are $1,600.
Compute the cash collection for quarter 3:
Hence, the cash collected for the quarter 1 is $4,933.
Compute the ending receivables for quarter 4:
Hence, the ending receivables are $1,333.
Compute the cash collection for quarter 4:
Hence, the cash collected for the quarter 1 is $4,267.
c)
To determine: The cash collection for each four quarters, when the collection period is 30 days.
Introduction:
Cash collection is the amount collected through business. It is a task of accounts receivables.
Average cash collection period is the number of days taken to collect the cash from the customers.
c)
Answer to Problem 12QP
The cash collections for each quarter are Quarter 1 is $3,333, Quarter 2 is $4,600, Quarter 3 is $5,067, and Quarter 4 is $4,533.
Explanation of Solution
Given information:
Accounts receivable at the beginning of the year is $1900, and the collection period is 30 days.
Compute the cash collection for each four quarters:
Note: All the receivables, which are outstanding, will be collected in the current year.
Compute the ending receivables for quarter 1:
Therefore, the ending receivables will be half of the current year sales.
Hence, the ending receivables are $2,866.67.
Compute the cash collection for quarter 1:
Hence, the cash collected for the quarter 1 is $3,333.
Compute ending receivables for quarter 2:
Hence, the ending receivables are $3,466.67.
Compute the cash collection for quarter 2:
Hence, the cash collected for the quarter 2 is $4,600.
Compute the ending receivables for quarter 3:
Hence, the ending receivables are $3,200
Compute the cash collection for quarter 3:
Hence, the cash collected for the quarter 1 is $5,067.
Compute the ending receivables for quarter 4:
Hence, the ending receivables are $2,667.
Compute the cash collection for quarter 4:
Hence, the cash collected for the quarter 1 is $4,533.
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Chapter 16 Solutions
ESSEN.OF CORP.FINANCE (LOOSE) >CUSTOM<
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