ACC 122 w2016-ol-u KDP Insurance Company specializes in term life insurance

| February 14, 2018

KDP 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 due, 50percent are paid in the month after they are billed , and 6 percent are paid in the second month following their due date.4percent of the billed premiums are paid late (in the third month following 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, $60,000; and in June, $62,000. How much cash does the company expect to collect in May?

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