Questions -
Q1. Jackson Company's credit history indicates that 60 percent of revenue is collected in the quarter the sales occur, 35 percent in the quarter following the month of sales, and 5 percent in the quarter thereafter. Assume Jackson's cash sales remain steady at $25,000 each quarter, credit sales are $600,000 in quarter 1, $520,000 in quarter 2, $480,000 in quarter 3, and $650,000 in quarter 4. What will Jackson's cash collections from sales be for the quarter 3?
A. $500
B. $525,000
C. $505,000
D. $540,500
E. None of the above.
Q2. Jackson Company's payment policy is to pay 40 percent of its accounts payable in the quarter purchases are made and 60 percent in the following quarter. Assume Jackson's credit purchases totaled $400,000 in quarter 1, $420,000 in quarter 2, $530,000 in quarter 3 and $580,000 in quarter 4. What will Jackson's cash payments be for quarter 3?
A. $482,500
B. $560,000
C. $530,000
D. $464,000
E. None of the above.