Marga Corporation has the following historical pattern of credit sales: 70% during the month of sale 4% in the third month after sale 15% in the first month after sale 1% uncollectible  10% in the second month after sale   Required: Compute for the total cash collections during the 4th calendar quarter. A/R balance on the Balance Sheet as of Dec. 31

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A: Credit sale=Total sale×100-Cash sale %=OMR 1,200,000×100-40%=OMR 720,000

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A: Payment for credit purchases in December = 10% of October + 15% of November + 75% of December

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A: Uncollectibles = Credit Sale ×2%=$425,000×2%=$8,500

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.