Freedom Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month.Cash sales are 20 percent of total sales each month.Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale.Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000. Accounts receivable on December 31 were $45,000.
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Freedom Manufacturing Company would expect to have an accounts receivable balance on March 31 of

Question

Quizplus · Accepted Answer

The accounts receivable balance on March 31 would include 15% of January sales ($60,000 * 15% = $9,000) and 35% of February sales ($30,000 * 35% = $10,500). March sales are not included as they are collected in the same month or the following months. Therefore, the total accounts receivable on March 31 is $9,000 + $10,500 = $19,500. However, the question seems to have a discrepancy in the options provided, as the correct calculation should be $19,500, not $39,600.

Freedom Manufacturing Company Needs to Know Its Anticipated Cash Inflows