Coyote Loco, Inc., a distributor of salsa, has the following historical collecti
ID: 2482252 • Letter: C
Question
Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales. 80 percent collected in the month of sale. 10 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.
Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.
The sales on account have been budgeted for the last seven months as follows:Explanation / Answer
June July August September October November December Sales 124,000 151,500 176,500 203,000 228,000 253,000 215,500 Collection 80% in the month of sales 99,200 121,200 141,200 162,400 182,400 202,400 172,400 10% in first month 12,400 15,150 17,650 20,300 22,800 25,300 5% in second month 6,200 7,575 8,825 10,150 11,400 4% in third month 4,960 6,060 7,060 8,120 Total cash collection 99,200 133,600 162,550 192,585 217,585 242,410 217,220