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 5QP
The cash collection of Quarter 1(Q1) is $565.
The cash collection of Quarter 2(Q2) is $585.
The cash collection of Quarter 3(Q3) is $610.
The cash collection of Quarter 4(Q4) is $715.
Explanation of Solution
Given information:
The collection period is 45 days, Sales of Q1 is $540, Sales of Q2 is $630, Sales of Q3 is $590, and Sales of Q4 is $840. The beginning accounts receivable is $295.
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 is $270.
Compute the cash collection for Q1:
Hence, the cash collection for Q1 is $565.
Compute the ending accounts receivable for Q2:
Hence, the ending accounts receivable of Q2 is $315.
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 $585.
Compute the ending accounts receivable for Q3:
Hence, the ending accounts receivable of Q3 is $295.
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 $610.
Compute the ending accounts receivable for Q 4:
Hence, the ending accounts receivable is $420.
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 $715.
b)
To determine: The cash collection 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 5QP
The cash collection of Quarter 1(Q1) is $655.
The cash collection of Quarter 2(Q2) is $600.
The cash collection of Quarter 3(Q3) is $603.33.
The cash collection of Quarter 4(Q4) is $756.67.
Explanation of Solution
Given information:
The collection period is 60 days, Sales of Q1 is $540, Sales of Q2 is $630, Sales of Q3 is $590, and Sales of Q4 is $840.
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 $180.
Compute the cash collection for Q1:
Hence, the cash collection for Q1 is $655.
Compute the ending accounts receivable for Q2:
Hence, the ending accounts receivable of Q2 is $210.
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 $600.
Compute the ending accounts receivable for Q3:
Hence, the ending accounts receivable of Q3 is $196.67.
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 $603.33.
Compute the ending accounts receivable for Q 4:
Hence, the ending accounts receivable is $420.
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 $756.67.
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 5QP
The cash collection of Quarter 1(Q1) is $475.
The cash collection of Quarter 2(Q2) is $570.
The cash collection of Quarter 3(Q3) is $616.67.
The cash collection of Quarter 4(Q4) is $673.33.
Explanation of Solution
Given information:
The collection period is 30 days, Sales of Q1 is $540, Sales of Q2 is $630, Sales of Q3 is $590, and Sales of Q4 is $840.
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 $360.
Compute the cash collection for Q1:
Hence, the cash collection for Q1 is $475.
Compute the ending accounts receivable for Q2:
Hence, the ending accounts receivable of Q2 is $420.
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 $570.
Compute the ending accounts receivable for Q3:
Hence, the ending accounts receivable of Q3 is $393.33
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 $616.67.
Compute the ending accounts receivable for Q 4:
Hence, the ending accounts receivable is $560.
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 $673.33.
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