A firm has $50 million and $60 million credit sales during the first two quarters of the year.Eighty% of the receivables are collected in the same quarter and the balance in the next quarter.What will be the total collection for the firm in the second quarter?

Question

Quizplus · Accepted Answer

For the first quarter, the amount collected would be:
$50 million x 80% = $40 million

For the second quarter, the amount collected from the first quarter's sales would be the remaining 20% (not collected in the first quarter) of $50 million plus the 80% of $60 million (second quarter sales):
$50 million x 20% + $60 million x 80% = $10 million + $48 million = $58 million

Therefore, the total collection for the firm in the second quarter would be $58 million.

A Firm Has $50 Million and $60 Million Credit Sales