Question
Lakewood Jet Skis has budgeted sales for June and July at $420,000 and $480,000, respectively. Sales are 75% credit, of which 40% is collected in the month of sale and 60% is collected in the following month. What is the accounts receivable balance on July 31?
Answer:
Total cash received in July= $453,000
Step-by-step explanation:
Cash sales : 25% × July sales = 25% × 480,000= 120,000
40% month of sales
40%× 75%× July sales
40%× 75%× 480,000= 144,000
60% following month:
= 60%× 75%× June sales
= 60%× 75%× 420,000 = 189000
Total cash received in July =120,000 + 144,000 + 189,000 =453,000
Total cash received in July= $453,000
Note hat 75% of the total sales is on credit , therefore the balance (25%) would be represent credit sales