Your firm is generally paid 45 days after it bills customers and all sales are made on credit. You have $740 in revenue in the first quarter and you began the quarter with $335 of accounts receivable. What were your collections during the quarter? Assume that there are 90 days in a quarter and that revenue occurs evenly throughout the quarter.
Accounts receivable estimated at end of quarter = sales * days sales in outstanding /number of days in a quarter
= 740 * 45 /90
= $ 370
Collections during the quarter = Beginning receivable +sales -ending receivables
= 335 + 740 -370
= $ 705
Your firm is generally paid 45 days after it bills customers and all sales are made...