Quiet Press 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.
A) $1,300
B) $1,400
C) $1,650
D) $1,900
E) $2,550

Question

Quizplus · Accepted Answer

To calculate how much Quiet Press expects to collect in the third quarter, we need to first find out how much they will have outstanding in accounts receivable from the second quarter.

Second quarter sales = $1,400
Accounts receivable from second quarter = 1,400 * (45/360) = $175

Therefore, the total outstanding accounts receivable at the end of the second quarter will be $175.

Now, we can calculate how much Quiet Press expects to collect in the third quarter:

Expected third quarter sales = $1,900 
Expected collections from second quarter accounts receivable = $175 
Total expected collections in third quarter = $1,900 - $175 = $1,725

Therefore, the best choice is C ($1,650), which is the closest option to $1,725.

Quiet Press Has a 45 Day Accounts Receivable Period