Question

The LaPann Corporation has obtained the following sales forecast data: July August September October Cash sales $ 80,000 $ 70,000 $ 50,000 $ 60,000 Credit sales $ 240,000 $ 220,000 180,000 200,000The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the following the month of sale and the remainder in the second month following the month of sale. There are no bad debts.Required:1. The budgeted accounts receivable balance on September 30 is:A) $126,000B) $148,000C) $166,000D) $190,0002. The budgeted cash receipts for October are:A) $188,000B) $248,000C) $226,000D) $278,000

Answer 1

1. 166,000

2. 188,000

Step-by-step explanation:

The budgeted accounts receivable balance on September 30 and Budgeted cash receipts for october n be calculated as follows

July

Opening -

Credit sales 240,000

Collection

20% of July 48,000

Closing 192,000

August

Opening 192,000

Credit sales 220,000

Total 412,000

Collection

20% of August 44,000

70% of July 168,000

Total receipts 208,000

Closing 200,000

September

Opening 200,000

Credit sales 180,000

Total 380,000

Collection

20% of september 36,000

70% of august 154,000

10% of july 24,000

Total receipts 214,000

Closing 166,000

October

Opening 166,000

Credit sales 200,000

Total 366,000

Collection

20% of October 40,000

70% of september 126,000

10% of august 22,000

Total receipt 188,000

Closing 178,000