Jefferson Boat Works has a 60 day collection period. Sales for the next calendar year are estimated at $1,800, $2,400, $2,700, and $3,600, respectively, by quarter starting with the ﬁrst quarter of the
Year. How much will the ﬁrm collect in the third quarter of next year? Assume that a year has 360
Days.

Question

Quizplus · Accepted Answer

To find out how much the firm will collect in the third quarter of next year, we need to first calculate the total credit sales for the first three quarters.

Total Credit Sales for First Quarter = $1,800
Total Credit Sales for Second Quarter = $2,400 + $1,800 = $4,200 (since it's cumulative)
Total Credit Sales for Third Quarter = $2,700 + $4,200 = $6,900 (since it's cumulative)

Now, we need to calculate the amount that will be collected in the third quarter. To do this, we need to apply the collection period of 60 days to the credit sales for the third quarter.

$6,900/360 days * 60 days = $1,150

Therefore, the amount that will be collected in the third quarter is $1,150.

However, we need to add this to the amount collected from the second quarter, since that is also within the 60 day collection period.

$1,150 + $2,400 = $2,550

Therefore, the best choice is C) $2,500.

Jefferson Boat Works Has a 60 Day Collection Period