E$829.$

Cash collections

Miriam Irby is president of MI Corp. Irby has decided to take a month$$s vaca$-$

tion with her family to South Africa, Zimbabwe, and Angola. Irby has researched the trip and

determined that the total cost of the trip for her family will be approximately $$50,000.$ Her travel

agent says that a $10$ percent discount can be obtained if Irby can write a check for the cost of the

trip by the end of November. Irby says she sees no problem in doing that given that the company$$s

expected billings for October, November, and December, respectively, are $$100,000,$ $$65,000,$ and

$$15,000($Irby will leave on vacation in December$).$

As of September $30,$ MI Corp.$$s accountant has estimated cash collections from billings to

be $15$ percent in the month of sale, $55$ percent in the month following sale, and $30$ percent in the second month following sale. The September $30$ Accounts Receivable balance is $$11,000$; that

amount is expected to be collected in October. Average monthly business costs are $$22,500.$

a$.$

What are MI Corp.$$s expected cash collections for October, November, and December?

b$.$

Can Irby pay for her trip in November and obtain the $10$ percent discount? Explain.

c$.$

What would you suggest that Irby do$?$