Question

Ratchet Manufacturing anticipates total sales for August, September, and October of $200,000, $210,000, and $220,500 respectively. Cash sales are normally 25% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August. Multiple Choice $50,000. $157,500. $150,000. $52,500. $200,000.

Answer 1

$150,000

Step-by-step explanation:

Computation for the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.

First step

Total sales of August = 0.25 × $200,000

Total cash sales = $50,000

Last step

Total credit sales for the month of August = Total sales in August - Total cash sales in August

Total credit sales for the month of August= $200,000 - $50,000

Total credit sales for the month of August= $150,000

Therefore the amount of accounts receivable to be reported on the company's budgeted balance sheet for August is $150,000