It is January 1 of Year 2. Sales for Harry Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. ALL sales are credit sales. Of these credit sales, 10% are collected during the month of sale, 30% in the following month, and 60% in the second following month. TOTAL sales for November and December of Year 1 were $200,000 and $400,000, respectively.

What is the forecasted amount of total CASH COLLECTIONS FROM SALES in March?

A. $280,000
B. $270,000
C. $310,000
D. $290,000
E. $300,000

D. $ 290,000

Explanation:

Computations of cash collections for March

Collections

For January sales $ 200,000 * 60 % second month after sales)     $ 120,000

For February sales $ 400,000 * 30 % (first month after sales)         $  120,000          

For March sales      $ 500,000 * 10 % ( month of sales)                    $    50,000

Collections for March                                                                          $ 290,000

The 99% confidence interval would be given by (12004.26;12995.74)  

Explanation:

1) Previous concepts

A confidence interval is "a range of values that’s likely to include a population value with a certain degree of confidence. It is often expressed a % whereby a population means lies between an upper and lower interval".

The margin of error is the range of values below and above the sample statistic in a confidence interval.

Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".

represent the sample mean for the sample  

population mean (variable of interest)

s=700 represent the sample standard deviation

n=17 represent the sample size  

2) Confidence interval

The confidence interval for the mean is given by the following formula:

  (1)

In order to calculate the critical value we need to find first the degrees of freedom, given by:

Since the Confidence is 0.99 or 99%, the value of and , and we can use excel, a calculator or a table to find the critical value. The excel command would be: "=-T.INV(0.005,16)".And we see that

Now we have everything in order to replace into formula (1):

So on this case the 99% confidence interval would be given by (12004.26;12995.74)