Question

Pink transportation's sales budget for the first quarter follows: January $125,000, February $300,000, March $290,000. All sales are on account (credit) with 50% collected in the month of sale, 30% collected in the following month after sale, and 20% collected in the second month after sale. There are no uncollectible accounts. What is the accounts receivable balance that would appear on the balance sheet on March 31?

Answer 1

The accounts receivable balance that would appear on the balance sheet on March 31 is $79,500.

Step-by-step explanation:

To calculate the accounts receivable balance that would appear on the balance sheet on March 31, we need to determine the total sales made in each month and the corresponding collections.

In January, the sales were $125,000, and 50% of this amount would be collected in the month of sale, which is $62,500.

In February, the sales were $300,000, and 30% of this amount would be collected in the following month, which is $90,000.

In March, the sales were $290,000, and 20% of this amount would be collected in the second month after sale, which is $58,000.

Adding up all the collections, we have $62,500 + $90,000 + $58,000 = $210,500.

To calculate the accounts receivable balance, we subtract the total collections from the total sales made in March: $290,000 - $210,500 = $79,500. Therefore, the accounts receivable balance that would appear on the balance sheet on March 31 is $79,500.