Question

Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. The sales forecasts for the next five quarters are as follows:

	Quarter in Coming Year					Following Year
	First	Second	Third	Fourth		First Quarter
Sales forecast	$396	$333	$343	$391		$391

On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $343. What is the forecast for Paymore’s cash receipts in each quarter of the coming year? (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Quarter	Collections
1
2
3
4

Answer 1

Schedule of expected cash collections

	First quarter	Second quarter	Third quarter	Fourth quarter
Cash collection from current quarter's sales	396 x 1/3 = 132	333 x 1/3 = 111	343 x 1/3 = 114.3333333333	391 x 1/3 = 130.3333333333
Cash collection from previous quarter's sales	343 x 2/3 = 228.66666666667	396 x 2/3 = 264	333 x 2/3 = 222	343 x 2/3 = 228.66666666667
Total cash collections	$361	$375	$336	$359

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