Question

A firm has forecasted sales of $3,000 in April, $4,500 in May and $6,500 in June. All sales are on credit. 30% is collected the month of sale and the remainder the following month. What will be the balance in accounts receivable at the beginning of July?

Answer 1

$4,550

Step-by-step explanation:

Data provided in the question:

Forecasted sales in April = $3,000

Forecasted sales in May = $4,500

Forecasted sales in June = $6,500

Percentage of amount collected in the month of sale = 30%

Percentage of amount collected in the following month of sale = 70%

Now,

Amount to be received in the month of July = 70% of sales June

or

Amount to be received in the month of July = 70% of $6,500

or

= 0.70 × $6,500

= $4,550