Question

Dora Distribution has projected the following quarterly sales. The accounts receivable at the beginning of the year is $1,000 and the collection period is 60 days. What are collections for the first quarter? Q1 Q2 Q3 04 Sales $ 1,645 $ 1,735 $ 2,055 $ 2,105 $1,822.50 $1.705.00 $1,548.33 $822.50 $1,645.00

Answer 1

Here avereage collection period is 60 days.

hence all opening account receviable at beginning of years is collected

During the first quater has 90 days period and 60 days related sales are outstanding and 30 days sale amount are received.

Collections during the first quater = 1000 + 1645*30/90 = 1000 + 548.3333

Collections during the first quater = $ 1548.33

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