Edgewater Industrial Products has a 45 day accounts receivable period. The estimated quarterly sales for this year, starting with the ﬁrst quarter, are $2,800, $3,100, $4,200, and $3,300,
Respectively. How much does the ﬁrm expect to collect in the fourth quarter? Assume that a year
Has 360 days.

Question

Quizplus · Accepted Answer

The firm expects to collect $4,200 in the fourth quarter. This is because the accounts receivable period is 45 days, which means that the firm will collect 45/360 of its sales in each quarter. The sales for the fourth quarter are $3,300, so the firm will collect 45/360 of $3,300 = $4,200.

Edgewater Industrial Products Has a 45 Day Accounts Receivable Period