Here is a forecast of sales by National Bromide for the first 4 months of 2012 (figures in thousands of dollars):
Month: 1 2 3 4
Cash sales 19 28 22 18
Sales-on-crdt 140 160 130 110
On average, 40% of credit sales are paid for in the current month, 20% in the next month, and the remainder in the month after that. What are expected cash collections in months 3 and 4?
To calculate the expected cash collections for months 3 and 4, we need to consider the percentage of credit sales that are paid in each respective month.
Let's start with month 3. According to the given information, 20% of credit sales are paid in the month after the sale. So, for the credit sales in month 3, which is 130 thousand dollars, we can expect 20% of it to be paid in month 4. This would be equal to 0.2 * 130 = 26 thousand dollars.
Now, let's move on to month 4. In this month, we have both cash sales and credit sales. We already calculated the cash sales for month 4, which is 18 thousand dollars.
For the credit sales in month 4, which is 110 thousand dollars, we need to consider the payment pattern described in the question. According to the information, 40% of credit sales are paid for in the current month (month 4). So, 40% of 110 thousand dollars would be equal to 0.4 * 110 = 44 thousand dollars.
Therefore, the expected cash collections in month 3 would be 26 thousand dollars, and the expected cash collections in month 4 would be 18 (cash sales) + 44 (40% of credit sales) = 62 thousand dollars.