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Question - Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales.
70 percent collected in the month of sale.
15 percent collected in the first month after sale.
10 percent collected in the second month after sale.
4 percent collected in the third month after sale.
1 percent uncollectible.
The sales on account have been budgeted for the last seven months as follows:
June $132,500
July 160,000
August 185,000
September 220,000
October 245,000
November 270,000
December 232,500
Required -
1. Compute the estimated total cash collections during October from credit sales.
2. Compute the estimated total cash collections during the fourth quarter from sales made on account during the fourth quarter.
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