Jackies ptisserie shop is located in downtown Montral, Gers in France. Jackie sells her pastries both to
Question:
Jackie’s pâtisserie shop is located in downtown Montréal, Gers in France. Jackie sells her pastries both to retail customers that visit her bakery and also distributes her famous line of choux pastries through LJM Kenneth Food Distributors. Jackie’s wholesale distributor purchases her pastries on credit which amounts to about 40 percent of the bakery’s total sales. Firm sales were roughly evenly split between credit and cash sales, with 10 percent of the credit sales collected in the month of the sale, 70 percent in the following month, and the remainder 2 months after the sale.
Balance of cash at the end of last year is €300,000 and accounts receivable are €200,000. Assume that all accounts receivable are from December. Historical and projected sales for the pâtisserie shop are given here:
a. Under these circumstances, what should the balance in accounts receivable be at the end of each month?
b. How much cash did Jackie’s realize for each month from sales and collections?
Step by Step Answer:
Foundations Of Finance
ISBN: 9781292318738
10th Global Edition
Authors: Arthur Keown, John Martin, J. Petty