Wake-Up Coffee has projected next year’s quarterly sales at $820, $850, $780, an
ID: 2811257 • Letter: W
Question
Wake-Up Coffee has projected next year’s quarterly sales at $820, $850, $780, and $910 for quarters 1 to 4, respectively. Accounts receivable at the beginning of the year are $200. Wake-Up has a collection period of 15 days. What is the amount of the accounts receivable balance at the end of quarter 2? Assume a year has 360 days.
Wake-Up Coffee has projected next year’s quarterly sales at $820, $850, $780, and $910 for quarters 1 to 4, respectively. Accounts receivable at the beginning of the year are $200. Wake-Up has a collection period of 15 days. What is the amount of the accounts receivable balance at the end of quarter 2? Assume a year has 360 days.
Explanation / Answer
Wake-Up has a collection period of 15 days , it means the at the end of the quarter only 15 days sales will remain in receivables The amount of the accounts receivable balance at the end of quarter 2 = [Quarter 2 Sales / No.of days in quarter] * Collection period in days The amount of the accounts receivable balance at the end of quarter 2 = [$850 / 90 days] * 15 days = $141.67
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