Coyote Loco, Inc., a distributor of salsa, has the following historical collecti
ID: 2462645 • Letter: C
Question
Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales. 75 percent collected in the month of sale. 15 percent collected in the first month after sale. 5 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:
Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales 75 percent collected in the month of sale 15 percent collected in the first month after sale 5 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 Ju August September October November December $123,500 151,000 176,000 202,000 227,000 252,000 214,500 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. Total cash collectionsExplanation / Answer
June July August September October November December Total 4th Qtr Sales 123500 151000 176000 202000 227000 252000 214500 693500 Collection - same month - 75% 92625 113250 132000 151500 170250 189000 160875 520125 Collection - following month - 15% 18525 22650 26400 30300 34050 37800 102150 collection-2nd month - 5% 6175 7550 8800 10100 11350 30250 collection - 3rd month - 4% 4940 6040 7040 8080 21160 Total cash collection 92625 131775 160825 190390 215390 240190 218105 673685 1) Cash collection during October 215390 2) Total cash collections - 4th quarter for 4th quarter sales October November December Total 4th Qtr Sales 227000 252000 214500 693500 Collection - same month - 75% 170250 189000 160875 520125 Collection - following month - 15% 34050 37800 71850 ( Oct-Nov sales) collection-2nd month - 5% 11350 11350 (Dec sales) Total 170250 223050 210025 603325 Total cash collections - 4th quarter for 4th quarter sales 603325