Question
This is a similar exercise posted on in the previous question (given below as reference) with different numbers and a different collection schedule: Logan Township
This is a similar exercise posted on in the previous question (given below as reference) with different numbers and a different collection schedule: Logan Township acquired its water system from a private company on June 1. No receivables were acquired with the purchase. Therefore, total accounts receivable on June 1 had a zero balance. Logan plans to bill customers in the month following the month of sale, and 70% of the resulting billings will be collected during the billing month. 90% of the remaining balance should be collectable in the next following month. The remaining uncollectible amounts will relate to citizens who have moved away. Such amounts are never expected to be collected and will be written off. Water sales during June are estimated at $4,000,000, and expected to increase 30% in July. August sales will be the same as July sales. Estimate the monthly cash collections for June, July, August, and September.
Logan Township acquired its water system from a private company on June 1. No receivables were acquired with the purchase. Therefore, total accounts receivable on June 1 had a zero balance. Logan plans to bill customers during the month of sale, and 70% of the resulting billings will be collected during the same month. 90% of the remaining balance should be collectable in the next following month. The remaining uncollectible amounts will relate to citizens who have moved away. Such amounts are never expected to be collected and will be written off. Water sales during June are estimated at $3,000,000 and remain the same in July and August. Estimate the monthly cash collections for August. An example for June and July follows:
June | July | August |
$3,000,000 X .7 = $2,100,000 (June receivables collected in June). This leaves $900,000 yet to be collected. | $3,000,000 X .7 = $2,100,000 (July billings collected in July). In addition, 90% of Junes uncollected receivables will be collected: $900,000 X .9 = $810,000. $2,100,000 + $810,000 = $2,910,000 will be collected in July. ($90,000 will never be collected) |
Without performing calculations, how would the answer change if Logan bills customers in the month following the month of sale?
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