Here is a forecast of sales by National Bromide for the first 4 months of 2012 (

Question

Here is a forecast of sales by National Bromide for the first 4 months of 2012 (figures in thousands of dollars):

  Month:          1            2                 3                 4
  Cash sales     32          41                35              31      
  Sales on credit 270      290              260           240      

On average, 50% of credit sales are paid for in the current month, 40% in the next month, and the remainder in the month after that. What are expected cash collections in months 3 and 4? (Enter your answers in whole dollars not in thousands of dollars.)

     Expected Cash
Collections
  Month 3     $_________           
  Month 4     $___________         

Explanation / Answer

Cash collection in the Month 3 = 35 + 0.50*260 + 0.4* 290+ 0.10*270 = $ 308 (figures in thousands of dollars)

Cash collection in the Month 4 = 31+ 0.50*240 + 0.4* 260+ 0.10*290 = $ 284 (figures in thousands of dollars)

Answer:

Expected Cash Collections:

Month 3              $ 308,000
Month 4              $ 284,000

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