Harris Electronics,a music publishing firm located in Tennessee,bills its clients on the first of the month.For example,any sale made in the month of July is billed August 1 and is due September 1.Clients traditionally pay as follows: 50% by the end of the first month (August),40% by the end of the second month (September),8% by the end of the third month (October),and 2% default on their bills.What is the total dollar value of first-quarter actual sales that will NOT be collected?

Question

Quizplus · Accepted Answer

The first step to solving this problem is to determine the total dollar value of first-quarter actual sales. This is not given in the problem, so we cannot simply subtract the total amount collected from the total amount billed. Instead, we need to calculate the total billed amount based on the sales made in the first quarter.

Assuming that the percentage breakdown given in the problem applies to all sales made in the quarter, we can calculate the total billed amount as follows:

Total billed = (50% of sales in Q1) + (40% of sales in Q1) + (8% of sales in Q1) + (2% default) 
Total billed = 0.5Q1 + 0.4Q1 + 0.08Q1 + 0.02Q1 
Total billed = Q1

In other words, the total amount billed for first-quarter sales is equal to the total amount of first-quarter sales.

Now we need to determine the amount that will not be collected. To do this, we can use the percentages given in the problem to calculate how much each client will pay and how much they will default on:

- 50% of the total billed amount will be paid in August 
- 40% of the total billed amount will be paid in September 
- 8% of the total billed amount will be paid in October 
- 2% of the total billed amount will be defaulted on

Using these percentages, we can calculate the total amount that will not be collected as follows:

Total uncollected = (50% of Q1) + (40% of Q1) + (8% of Q1) + (2% of Q1) 
Total uncollected = 0.5Q1 + 0.4Q1 + 0.08Q1 + 0.02Q1 
Total uncollected = 1Q1

In other words, the total amount that will not be collected is equal to the total amount of first-quarter sales.

Therefore, the answer is C) $5,160.

Harris Electronics,a Music Publishing Firm Located in Tennessee,bills Its Clients