What will be the firms collections in may

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Reference no: EM132036436

Question

Use the following data to answer questions below.

Month	Jan	Feb	Mar	Apr	May	Jun	July	Aug
Sales ($ K)	53	40	70	60	55	85	42	35

a. What will be the firm's collections in May, if the firm gives it customers the following number of days to pay:

Number of days of credit	Collections ($ K)
0
30
60
90
15
45
75
40
55

b. Firm gives its customers 2 months credit. In March, the firm received a cash advance of $20K from one of its customers. Sales to this customer (which are included in the sales figures below) are $12K, $6K, and $2K in April, May, and June. Fill in the following table with expected A/R and Collections ($ '000) for March, April, May, June, July, and August:

Month	March	April	May	June	July	Aug
Sales
A/R @ month end
Collections

c. Firm currently gives its customers 90 days credit. It has notified its customers that it plans to reduce its credit period. It expects to make the transition after April (end of April A/R = 90 days of sales). By the end of May, it hopes to cut its A/R to 60 days of sales, and further cut it to 30 days of sales by the end of June. Fill in the following table:

Month	April	May	June	July	Aug
Collections

Reference no: EM132036436

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