Question

Memphis Company anticipates total sales for April, May, and June of $970,000, $1,070,000, and $1,120,000 respectively. Cash sales are normally 20% of total sales. Of the credit sales, 40% are collected in the same month as the sale, 55% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30.

Answer 1

The amount of accounts receivable reported on the company’s budgeted balance sheet for June 30 will be $580,400.

Step-by-step explanation:

The Trade Receivable Budget can be used to calculate the amount of of accounts receivable balance on June 30 as follows

April May June

Balance Brought forward $0 $465,600 $552,400

Credit Sales at 80% $776,000 $856,000 $896,000

Cash Received - 40% ($310,400) ($342,400) ($358,400)

Cash Received - 55% $0 ($426,800) ($470,800)

Cash Received - 5% $0 $0 ($38,800)

Balance Carried forward $465,600 $552,400 $580,400

Conclusion :

The amount of accounts receivable reported on the company’s budgeted balance sheet for June 30 will be $580,400.