Question

Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales.

60 percent collected in the month of sale.

20 percent collected in the first month after sale.

15 percent collected in the second month after sale.

4 percent collected in the third month after sale.

1 percent uncollectible.

The sales on account have been budgeted for the last seven months as follows:

June	$	127,000
July		154,500
August		179,500
September		209,000
October		234,000
November		259,000
December		221,500

Required:

1. Compute the estimated total cash collections during October from credit sales.

2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.

1.	Total cash collections
2.	Total cash collections

Answer 1

	October	November	December
Sales made in:
			-
July	$6,180		-
	(154500*4%)
August	$26,925	$7,180	-
	(179500*15%)	(179500*4%)
September	$41,800	$31,350	$8,360
	(209000*20%)	(209000*15%)	(209000*4%)
October	$140,400	$46,800	$35,100
	(234000*60%)	(234000*20%)	(234000*15%)
November	-	$155,400	$51,800
		(259000*60%)	(259000*20%)
December	-	-	$132,900
			(221500*60%)
Total	$215,305	$240,730	$228,160

Part-1 : Total Collection made in October:- $215305

Part-2 : Total Collection made in 4th Quarter=$215305+240730+228160=$684195