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Question
…Forecast monthly sales are $3,000 for October, $6,000 for November and December, and
$10,500 from January 20X4 onwards. Two months’ credit will be allowed to customers but only one month’s credit will be received from suppliers of inventory….
Solution
…In Current Asset section of Forecast Statement of Financial Position,
Receivables=2 x $10,500=$21,000…
I don’t understand why 10,500 is multiplied by 2.Because they will be owed for two months – the current month and the previous month, because they are giving 2 months credit.
I don’t understand yet. How do u count those 2 months? Plz explain it to me in detail.
If they sell in January then they will not receive the money until March.
If they sell in February then they will not receive the money until April.Therefore at the end of February they will still be owed for both January and February sales.
The same will apply to each later month.
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