Question

(LO 7) Memphis Company anticipates total sales for April, May, and June of $960,000, $1,060,000, and $1,110,000 respectively. Cash sales are normally 20% of total sales. Of the credit sales, 35% are collected in the same month as the sale, 60% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30.

Answer 1

$619,600

Step-by-step explanation:

May month accounts receivable = $1060000*80%*5%

May month accounts receivable = $42,400

June month accounts receivable = $1110000*80%*65%

June month accounts receivable = $577,200

Amount of accounts receivable on June 30 = May month accounts receivable + June month accounts receivable

Amount of accounts receivable on June 30 = $42400+$577200

Amount of accounts receivable on June 30 = $619,600

So, the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30 is $619,600