(Determining the effect of credit policy on cash flow, LO 2) You are provided the following information about McPherson Inc.:

Sales by quarter for 2015 were

Accounts receivable at the beginning of the Ist quarter were $45,000. McPherson gives its customers 60 days to pay for purchases.
Assume sales and collections occur evenly over each quarter.
Required:

a. How much cash will McPherson collect in each quarter of 2015 and for the entire 20152

b. If McPherson changed its credit policy so customers had to pay in 90 days how much would it collect in each quarter and for the entire 2015 (assume beginning accounts receivable is $127,500)?

Transcribed Image Text:

1st Quarter $105,000 2nd Quarter $124,000 3rd Quarter $125,000 4th Quarter Total $155,000 $509,000