A company has forecast sales in the first 3 months of the year as follows (figures in millions): January, $90; February, $20; March, $30. 70% of sales are usually paid for in the month that they take place and 30% in the following month. Receivables at the end of December were $20 million. What are the forecasted collections on accounts receivable in March?

Question

Quizplus · Accepted Answer

Forecasted sales for March = $30 million70% of sales are usually paid for in the month that they take place = $30 million x 70% = $21 million30% in the following month = $30 million x 30% = $9 millionReceivables at the end of December were $20 millionForecasted collections on accounts receivable in March = $20 million (receivables at the end of December) + $21 million (70% of March sales) = $41 million

A Company Has Forecast Sales in the First 3 Months