Question: Given the Account Receivables/Payables Average collection period, how to find the proportion to collect/pay each month? What is the formula/method to find this?

Example:

Account Receivables Average collection period = 30 days; this implies that 2/3 of sales are collected in the quarter made, and the remaining 1/3 are collected the following quarter.

Account Payables period Average collection period = 45 days, so half of the purchases will be paid for each quarter, and the remaining will be paid the following quarter.

Smith and Johnson have expected sales of $380, $340, $430 and $480 for the months of January through April, respectively. The accounts receivable period is 15 days. How much did the firm collect in the month of March? Assume that a year has 360 days.

Answer: [(15/30) x $340] + [(15/30) x $430] = $385

How about other periods? Like 10, 15, 20, 40, 60 days...?