Homework SourseDillingham Inc has a 60day collection period The projected s
Dillingham, Inc., has a 60-day collection period. The projected sales for each quarter next year are shown below. What are collections for the third quarter?
$4,368.33
$3,023.33
$4,801.67
$3,866.67
$4,201.67
| Q1 | Q2 | Q3 | Q4 | |||||||||
| Sales | $ | 3,530 | $ | 4,035 | $ | 4,535 | $ | 4,935 | ||||
Solution
Collection Period = 60 days
Collection from Current Quarter Sales = 1/3
Collection from Previous Quarter Sales = 2/3
Collections for 3rd Quarter = 2/3 * Sales for 2nd Quarter + 1/3 * Sales for 3rd Quarter
Collections for 3rd Quarter = 2/3 * $4,035 + 1/3 * $4,535
Collections for 3rd Quarter = $4,201.67
