Firefly Manufacturing Company Needs to Know Its Anticipated Cash Inflows

Firefly Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000.
Accounts receivable on December 31 were $45,000.
Firefly Manufacturing Company would expect to have an accounts receivable balance on March 31 of

A) $45,000.
B) $55,500.
C) $39,600.
D) $90,000.

Correct Answer:

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