Westmore Products has projected the following quarterly sale

Westmore Products has projected the following quarterly sales. The accounts receivable at the beginning of the year is $400 and the collection period is 45 days. What are collections for the first quarter?

Q1 Q2 Q3 Q4
Sales $ 675 $ 730 $ 815 $ 1,080

$625.00

$737.50

$337.50

$675.00

$711.67

Solution

Correct answer is option b.$737.50

Calculation of collection for the first Quarter

=Account receiveble opening balance to be recoverd in 45 days + [1st quarter sales /90*45]

=400+[675/90*45]

=400+337.5

=$737.5

It has been assumed that 1st quarter sales has occured evenly during the period.