Question

The Morning Jolt Coffee Company has projected the following quarterly sales amounts for the coming year:

	Q1			Q2			Q3			Q4
Sales	$	660		$	690		$	770		$	840

a.	Accounts receivable at the beginning of the year are $280. The company has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.):

	Q1		Q2		Q3		Q4
Beginning receivables	$		$		$		$
Sales	660.00		690.00		770.00		840.00
Cash collections
Ending receivables	$		$		$		$

b.	Recalculate the cash collections with a collection period of 60 days. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.)

	Q1		Q2		Q3		Q4
Beginning receivables	$		$		$		$
Sales	660.00		690.00		770.00		840.00
Cash collections
Ending receivables	$		$		$		$

c.	Recalculate the cash collections with a collection period of 30 days. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.)

	Q1		Q2		Q3		Q4
Beginning receivables	$		$		$		$
Sales	660.00		690.00		770.00		840.00
Cash collections
Ending receivables	$		$		$		$

Answer 1

a. 45 day collection period:

Cash Collections = Beginning Receivables + (Sales x (90 - 45) / 90 )

Ending Receivables = Beginning Receivables + Sales - Cash Collections.

	Q1	Q2	Q3	Q4
Beginning Receives	280	330	345	385
Sales	660	690	770	840
Cash Collections	-610	-675	- 730	- 805
Ending Receivables	330	345	385	420

b. 60 day collection period:

Cash Collections = Beginning Receivabes + (Sales x ( 90 - 60) / 90)

	Q1	Q2	Q3	Q4
Beginning Receivables	280	440	460	513.33
Sales	660	690	770	840
Cash Collections	- 500	-670	- 716.67	-793.33
Ending Receivables	440	460	513.33	560

c. 30 day collection period:

Cash Collections = Beginning Receivables + ( Sales x (90 - 30) / 90)

	Q1	Q2	Q3	Q4
Beginning Receivables	280	220	230	256.67
Sales	660	690	770	840
Cash Collections	-720	-680	-743.33	-816.67
Ending Receivables	220	230	256.67	280