Question

C5.3 PA9Fitbands' estimated sales are: October $131,982 November $195,723 December $249,283 January $124,298 February $124,284 March $124, 273 What are the balances in accounts receivable for January, February, and March if 65% of sales are collected in the month of sale, 25% is collected the month after the sale, and 10% is the second month after the sale?

Answer 1

Accounts receivable in January = $68,432.60

Accounts receivable in February = $55,929.20

Accounts receivable in March = $55,958.95

Explanation:

65% of sales collected in the month of sales + 25% in the following month + 10% in second month after sales.

In January, total accounts receivable will be the amounts outstanding or unpaid by the end of January. By the end of January, a total of 10% of December sales & 35% of January sales remain outstanding.

Accounts receivable in January = 35% of January sales + 10% of December sales

Accounts receivable in January = (35% * $124298) + (10% * $249283)

Accounts receivable in January = $43504.3 + $24928.3

Accounts receivable in January = $68432.60

In February, total accounts receivable will be the amounts outstanding or unpaid by the end of February. By the end of February, a total of 10% of January sales & 35% of February sales remain outstanding.

Accounts receivable in February = 35% of February sales + 10% of January sales

Accounts receivable in February = (35% * $124284) + (10% * $124298)

Accounts receivable in February = $43,499.4 + $12,429.8

Accounts receivable in February = $55,929.20

In March, total accounts receivable will be the amounts outstanding or unpaid by the end of march. By the end of March, a total of 10% of February sales & 35% of March sales remain outstanding.

Accounts receivable in March = 35% of March sales + 10% of February sales

Accounts receivable in March = (35% * $124373) + (10% * $124284)

Accounts receivable in March = $43530.55 + $12428.4

Accounts receivable in March = $55,958.95