Breakwater Aquatics has a 40-day accounts receivable period. The estimated quart

Question

Breakwater Aquatics has a 40-day accounts receivable period. The estimated quarterly sales for this year, starting with the first quarter, are $6,800, $7,100, $8,200, and $6,400, respectively. What is the accounts receivable balance at the beginning of the third quarter? Assume a year has 360 days.

Breakwater Aquatics has a 40-day accounts receivable period. The estimated quarterly sales for this year, starting with the first quarter, are $6,800, $7,100, $8,200, and $6,400, respectively. What is the accounts receivable balance at the beginning of the third quarter? Assume a year has 360 days.

Explanation / Answer

Hi here

account receivable period= 40 days

days in a year =360

days in a quarter= 90

we need to fin out account rec. balance at the beginning of third quarter = ending to second quarter

balance at the end of second quarter = sale of second quarter*(account rec. period)/days in quarter

=7100*40/90 = $3,156

hence second option is correct

Thanks

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