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Duck-n-Run has projected sales of $120,000 for January, $118,000 for February, and $146,000 for March. The...

Duck-n-Run has projected sales of $120,000 for January, $118,000 for February, and $146,000 for March. The firm collects 55 percent in the month of sale, 43 percent in the month after sale, and 2 percent two months after sale. The accounts receivable balance at the end of the previous quarter was $27,000 of which $22,000 was uncollected December sales.

What is the amount of the January collections?

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Answer #1

Accounts Receivable = $27,000

Uncollected November Sales = $5,000
Uncollected December Sales = $22,000

December Sales = Uncollected December Sales / 0.45
December Sales = $22,000 / 0.45
December Sales = $48,889

January:

Collection from November Sales = $5,000

Collection from December Sales = $48,889 * 43%
Collection from December Sales = $21,022

Collection from January Sales = $120,000 * 55%
Collection from January Sales = $66,000

Total Collection in January = Collection from November Sales + Collection from December Sales + Collection from January Sales
Total Collection in January = $5,000 + $21,022 + $66,000
Total Collection in January = $92,022

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