The Bird Cage has the following estimated sales. Purchases are equal to 67 percent of the following quarter's sales.The sales for the first quarter of the following year are estimated at $42,100.The accounts receivable period is 30 days and the accounts payable period is 45 days.Assume there are 30 days in each month.By how much will the firm's collections exceed its payments for quarter 2?

Question

The Bird Cage has the following estimated sales.  Purchases are equal to 67 percent of the following quarter's sales.The sales for the first quarter of the following year are estimated at $42,100.The accounts receivable period is 30 days and the accounts payable period is 45 days.Assume there are 30 days in each month.By how much will the firm's collections exceed its payments for quarter 2?

Quizplus · Accepted Answer

Q₂ collections = 30/90($38,200) + 60/90($36,100) = $36,800; Q₂ payments = 45/90 (0.67 × $36,100) + 45/90(0.67 × $33,800) = $23,416.50; Difference = $36,800 - $23,416.50 = $13,383.50

The Bird Cage Has the Following Estimated Sales