Baker Industries has a 45 day accounts receivable period. The estimated quarterly sales for this year, starting with the ﬁrst quarter, are $1,200, $1,400, $1,900 and $3,200, respectively. How much
Does the ﬁrm expect to collect in the third quarter? Assume that a year has 360 days.

Question

Quizplus · Accepted Answer

To find the amount of money Baker Industries expects to collect in the third quarter, we need to take the sales for that quarter and multiply by the percentage of receivables expected to be collected during that time frame.

First, we need to find the average daily sales for the third quarter, which is (1,900/90)= $21.11.

Next, we need to find the percentage of sales that fall within Baker's 45-day accounts receivable period. To do this, we divide the length of the receivable period (45 days) by the length of the year (360 days) to get 0.125.

Finally, we can multiply the average daily sales for the third quarter ($21.11) by the percentage of those sales that fall within the receivable period (0.125) and multiply that result by the number of days in the third quarter (90) to get the total expected collections for that period:

$21.11 x 0.125 x 90 = $166.88

Therefore, the answer is C) $1,650.

Baker Industries Has a 45 Day Accounts Receivable Period