Cash flow of accounts receivable. Myers and Associates, a famous law firm in California, bills its...
Cash flow of accounts receivable. Myers and Associates, a famous law firm in California, bills its clients on the first of each month. Clients pay in the following fashion: 40% pay at the end of the first month, 30% pay at the end of the second month, 20% pay at the end of the third month, 5% pay at the end of the fourth month, and 5% default on their bills. Myers wants to know the anticipated cash flow for the first quarter of 2015 if the past billings and anticipated billings follow this same pattern. The actual and anticipated billings are as follows:
|
Fourth Quarter Actual Billings |
First Quarter Anticipated Billings |
|||||
|
Oct. |
Nov. |
Dec. |
Jan. |
Feb. |
Mar. |
|
|
$290,000 |
$236,000 |
$214,000 |
$246,000 |
$267,000 |
$298,000 |
|
What is the anticipated cash flow for January of 2015 if past billings and anticipated billings follow this same pattern? $________ (Round to the nearest dollar.)
What is the anticipated cash flow for February of 2015 if past billings and anticipated billings follow this same pattern? $_______ (Round to the nearest dollar.)
What is the anticipated cash flow for March of 2015 if past billings and anticipated billings follow this same pattern? $_______ (Round to the nearest dollar.)
Homework Answers
Anticipated Cash flow for Month of january:
40% of billing of this month(january)
(246000*40%)= 98400
30% of previous month(December)
(214000*30%)=. 64200
20% of previous second month (November)
(236000*20%)= 47200
5% of Previous third month
(290000*5%)= 14500
____'__________________________________________
224300
________________________________________________
Anticipated Cash flow for Month of february:
40% of billing of this month(February)
(267000*40%)= 106800
30% of previous month(January)
(246000*30%)= 73800
20% of previous second month (December)
(214000*20%)= 42800
5% of Previous third month(November)
(236000*5%)=. 11800
__________________________________
235200
__________________________________
Anticipated Cash flow for Month of March:
40% of billing of this month(March)
(298000*40%)=. 119200
30% of previous month(February)
(267000*30%)= 80100
20% of previous second month (january)
(246000*20%)=. 49200
5% of Previous third month(November)
(214000*5%)= 10700
__________________________________
259200
__________________________________
So, Anticipated Cash flow for Month of january is $ 224300
Anticipated Cash flow for Month of february is $235200
Anticipated Cash flow for Month of March is $259200
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