Question 1:

Calculating Cash Collections: The Cobra Company has projected the following quarterly sales amounts for the coming year:

                         Q1                      Q2                 Q3                 Q4

Sales             $8,100              $9,800            $9, 200         $7, 600

a. Accounts receivable at the beginning of the year are $3,700. The company has a 45-day collection period. Calculate cash collections in each year of the four quarters by completing the following:

                                            Q1            Q2            Q3            Q4

Beginning receivables

Sales

Cash collections

Ending receivables

b. Rework (a) assuming a collection period of 60 days

c. Rework (a) assuming a collection period of 30 days.

Calculating Float: You have $13, 200 on deposit with no outstanding checks or unclear deposits. If you deposit a check for $4, 800, does this create a disbursement float or a collection float? What is your available balance? Book balance?

Question 2:

Cash Discounts: You place an order for 900 units of Good X  at a unit price of $46.  The supplier offers terms of 1/20, net 35.

a. How long do you have to pay before the account is overdue?  If you take the full period, how much should you remit?