Standard Insurance Company specializes in term life insurance contracts. Cash collection experience shows that 40 percent...
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Standard Insurance Company specializes in term life insurance contracts. Cash collection experience shows that 40 percent of billed premiums are collected in the month in which they are billed, 50 percent are paid in the first month after they are billed, and 6 percent are paid in the second month after they are billed. Four percent of the billed premiums are paid late (in the third month after they are billed) and include a 10 percent penalty payment. Total billing notices in January were $58,000; in February, $62,000; in March, $66,000; in April, $65,000; in May, S60,000; and in June, $62,000. How much cash does the company expect to collect in May? Standard Insurance Company specializes in term life insurance contracts. Cash collection experience shows that 40 percent of billed premiums are collected in the month in which they are billed, 50 percent are paid in the first month after they are billed, and 6 percent are paid in the second month after they are billed. Four percent of the billed premiums are paid late (in the third month after they are billed) and include a 10 percent penalty payment. Total billing notices in January were $58,000; in February, $62,000; in March, $66,000; in April, $65,000; in May, S60,000; and in June, $62,000. How much cash does the company expect to collect in May?
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Related Book For
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
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