Question

Kingston budgets total sales for June and July of $490,000 and $308,000, respectively. Cash sales are 65% of total sales. Of the credit sales, 20% are collected in the month of sale, 60% are collected during the first month after the sale, and the remaining 20% are collected in the second month after the sale. Determine the amount of accounts receivable reported on the company's budgeted balance sheet as of July 31. Hint: Determine the percent of June and July sales that are uncollected at July 31. As of July 31 Sales month Total Sales Credit Sales Percent Uncollected Amount Uncollected June $ 490,000 July 308,000 Total

Answer 1

Here is the solution:

June sales:

Total sales: $490,000
Cash sales: 65% = $321,500
Credit sales: 35% = $168,500
Of the credit sales, 20% are collected in the month of sale: $33,700
The remaining 80% of June credit sales are uncollected at July 31: $134,800
July sales:

Total sales: $308,000
Cash sales: 65% = $200,200
Credit sales: 35% = $107,800
Of the credit sales, 20% are collected in the month of sale: $21,560
The remaining 80% of July credit sales are uncollected at July 31: $86,240
Total accounts receivable as of July 31: $134,800 + $86,240 = $221,040

Therefore, the amount of accounts receivable reported on the company's budgeted balance sheet as of July 31 is $221,040.