Question

Petal Co. reported the following information for 2013:

October November December
Budgeted sales $930,000 $870,000 $1,080,000
• All sales are on credit.
• Customer amounts on account are collected 50% in the month of sale and 50% in the following month.
How much is the November 30, 2013 budgeted Accounts Receivable?

Answer 1

The November 30, 2013 budgeted Accounts Receivable for Petal Co. is $900,000, which includes 50% of October's uncollected sales ($465,000) and 50% of November's sales ($435,000).

Step-by-step explanation:

To calculate the November 30, 2013 budgeted Accounts Receivable for Petal Co., we must consider the sales data for both October and November since the company collects 50% of sales in the month they occur and the remaining 50% in the following month. November's Accounts Receivable will include 50% of November's sales and 50% of October's sales that are yet to be collected.

For October, with budgeted sales of $930,000, 50% not collected in October will carry over to November, which is $930,000 * 50% = $465,000. In November, the budgeted sales are $870,000, and the company will collect 50% during the same month. Therefore, 50% that will become part of Accounts Receivable at the end of November is $870,000 * 50% = $435,000. Adding these two figures gives us the total November 30, 2013 budgeted Accounts Receivable: $465,000 (from October sales) + $435,000 (from November sales) = $900,000.