Question

Leon Industries is working on their budgeted ending accounts receivable balance. If they budgeted $12,500 in sales in July, how much will they collect on July sales in July?

Cash Receipts Schedule
a.% collected the same month 70%
b.% collected next month 25%
c.Uncollectable 5% (the uncollectable A/R written off at the end of the second month)
d.Beginning A/R balance-July $7,000

Answer 1

Leon Industries will collect $8,750 on July sales in July, which represents 70% of their budgeted sales of $12,500 for that month.

Step-by-step explanation:

To calculate the budgeted ending accounts receivable balance for Leon Industries, we need to apply the given percentages to the $12,500 in sales budgeted for July. According to the question, 70% of sales are collected the same month, 25% are collected the next month, and 5% are uncollectable.

The amount collected on July sales in July would be:

70% of $12,500 = 0.70 × $12,500 = $8,750.

This means that Leon Industries expects to collect $8,750 out of the $12,500 in sales in the month of July. The remaining balances will be collected in the following month or written off as uncollectable based on the given percentages.