Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter 13, Question 4. Attached is a similar question with answers. Please provide the same three answers for the new question
Transcribed Image Text:**Cash Flow of Accounts Receivable**
Myers and Associates, a renowned law firm in California, bills its clients on the first of each month. Clients pay according to the following structure:
- 40% pay at the end of the first month
- 30% pay at the end of the second month
- 20% pay at the end of the third month
- 5% pay at the end of the fourth month
- 5% default on their bills
Myers is interested in projecting the anticipated cash flow for the first quarter of 2015 if billing follows this pattern. The actual and anticipated billings are as follows:
| | Fourth Quarter Actual Billings | First Quarter Anticipated Billings |
|------------------------|------------------------------|--------------------------------------|
| **Oct.** | $272,000 | (blank) |
| **Nov.** | $223,000 | (blank) |
| **Dec.** | $200,000 | (blank) |
| **Jan.** | (blank) | $236,000 |
| **Feb.** | (blank) | $245,000 |
| **Mar.** | (blank) | $287,000 |
1. **Anticipated Cash Flow for January 2015**
- $212,600 (Rounded to the nearest dollar)
2. **Anticipated Cash Flow for February 2015**
- $219,950 (Rounded to the nearest dollar)
3. **Anticipated Cash Flow for March 2015**
- $245,500 (Rounded to the nearest dollar)
![**Cash Flow of Accounts Receivable**
Myers and Associates, a renowned law firm in California, bills its clients on the first of each month. Clients pay according to the following schedule: 40% pay at the end of the first month, 30% at the end of the second month, 20% at the end of the third month, 5% at the end of the fourth month, and 5% default on their bills. Myers seeks to predict the anticipated cash flow for the first quarter of 2015, assuming that past billings and anticipated billings adhere to the same pattern. The actual and anticipated billings are as follows:
| Month | Fourth Quarter Actual Billings | First Quarter Anticipated Billings |
|-------|---------------------------------|----------------------------------|
| Oct. | $579,000 | |
| Nov. | $464,000 | |
| Dec. | $407,000 | |
| Jan. | | $508,000 |
| Feb. | | $539,000 |
| Mar. | | $580,000 |
**Question:**
What is the anticipated cash flow for January 2015 if past billings and anticipated billings follow this pattern?
**Answer:**
To calculate the anticipated cash flow for January, include the following payments:
- 40% of January billings.
- 30% of December billings.
- 20% of November billings.
- 5% of October billings.
(Round to the nearest dollar.)
$[Enter amount here]](https://content.bartleby.com/qna-images/question/8a986b02-ba6c-4ef1-b256-a9c9c22af021/0b3171f8-1d75-493b-a2cc-33138678f076/0vob2fo_processed.png)
Transcribed Image Text:**Cash Flow of Accounts Receivable**
Myers and Associates, a renowned law firm in California, bills its clients on the first of each month. Clients pay according to the following schedule: 40% pay at the end of the first month, 30% at the end of the second month, 20% at the end of the third month, 5% at the end of the fourth month, and 5% default on their bills. Myers seeks to predict the anticipated cash flow for the first quarter of 2015, assuming that past billings and anticipated billings adhere to the same pattern. The actual and anticipated billings are as follows:
| Month | Fourth Quarter Actual Billings | First Quarter Anticipated Billings |
|-------|---------------------------------|----------------------------------|
| Oct. | $579,000 | |
| Nov. | $464,000 | |
| Dec. | $407,000 | |
| Jan. | | $508,000 |
| Feb. | | $539,000 |
| Mar. | | $580,000 |
**Question:**
What is the anticipated cash flow for January 2015 if past billings and anticipated billings follow this pattern?
**Answer:**
To calculate the anticipated cash flow for January, include the following payments:
- 40% of January billings.
- 30% of December billings.
- 20% of November billings.
- 5% of October billings.
(Round to the nearest dollar.)
$[Enter amount here]
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