The Wake-Up Coffee Company has projected the following quarterly sales amounts for the coming year:
Accounts receivable at the beginning of the year are $200.Wake-Up has a 60-day collection period.What is the amount of the accounts receivable balance at the end of Quarter 3?

Question

The Wake-Up Coffee Company has projected the following quarterly sales amounts for the coming year: 
Accounts receivable at the beginning of the year are $200.Wake-Up has a 60-day collection period.What is the amount of the accounts receivable balance at the end of Quarter 3?

Quizplus · Accepted Answer

To solve this problem, we need to calculate the total sales for each quarter and then determine how much of those sales have not yet been collected by the end of Quarter 3.

Total sales for Quarter 1 = $150 + $200 + $170 = $520
Total sales for Quarter 2 = $220 + $180 + $190 = $590
Total sales for Quarter 3 = $190 + $240 + $210 = $640

Since Wake-Up has a 60-day collection period, at the end of Quarter 3, there will still be unpaid invoices from Quarter 3 that are within the 60-day collection period. We can estimate the amount of these unpaid invoices by calculating 60/90 of the total sales in Quarter 3.

60/90 x $640 = $426.67

Therefore, the total accounts receivable balance at the end of Quarter 3 would be:

$200 (beginning balance) + $520 (Quarter 1 sales) + $590 (Quarter 2 sales) + $426.67 (unpaid invoices from Quarter 3) = $1,736.67

Rounding to the nearest $25, the answer is $500.

The Wake-Up Coffee Company Has Projected the Following Quarterly Sales