Complete Question
The Litzenberger Company has projected the following quarterly sales amounts for the coming year: Sales
Q1 $800
Q2 $830
Q3 $910
Q4 $990
Accounts receivable at the beginning of the year are $270. The company has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. A negative answer should be indicated by a minus sign.)
Beginning receivables (a)
Sales (b) $800.00 $830.00 $910.00 $990.00
Cash collections (c )
Ending receivables
Answer:
The account receivable at the beginning of the year are $270 ------ Given
We'll use the sales row to calculate the account receivable at the beginning of other quarters.
Q1 = $270
Q2 = $800/2 = $400
Q3 = $830/2 = $415
Q4 = $910/2 = $455
Calculating the cash collections...
This is calculated by -1(Beginning Receivable + ½(Sales))
Q1 = -(270 + ½ * 800) = $670
Q2 = -(400 + ½ * 830) = -$815
Q3 = -(415 + ½ * 910) = -$870
Q4 = -(455 + ½990) = -$950
The 45 days collection period means that all receivable outstanding would be collected in current month plus ½ of sales of current month
The complete table is
Beginning receivables (a) $270 ---- $400 --- $415 --- $455
Sales (b) $800.00 ---- $830.00 --- $910.00 --- $990.00
Cash collections (c ) -$670 --- -$815 --- -$870 --- -$950
Ending receivables (a+b-c) $430.00 $415.00 $455.00 $495.00
Explanation: