Exercise 13-36 Estimate Cash Receipts (LO 13-5)

Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes more frequent calls during the summer. The number of subscribers also varies with the season. The number of subscribers and the average number of calls to each subscriber for the months of interest follow:

	Subscribers			Service calls (per subscriber)
March		600			0.6
April		700			0.9
May		1,400			1.5
June		1,600			2.5
July		1,600			3.0
August		1,500			2.4

The average price charged for a service call is $80. Of the service calls, 30 percent are paid in the month the service is rendered, 60 percent in the month after the service is rendered, and 8 percent in the second month after. The remaining 2 percent is uncollectible.

Required:

What are Varmit-B-Gones expected cash receipts for May, June, July, and August?

	Cash Receipts
May
June
July
August

Need explanation of the answers. Looked at similar problems, not a very good explanantion.