Question

Towing Company has budgeted sales for the next six months as follows: Sales for Cash Sales on Account May $42,000 $257,000 June $37,000 $243,000 July $29,000 $238,000 August $48,000 $269,000 September $52,000 $251,000 October $45,000 $263,000 On average, 32% of the sales on account are collected in the month of sale, 40% are collected in the month following sale, 16% are collected in the second month following sale, 8% are collected in the third month following sale, and the remaining 4% is collected four months after the month of sale. Calculate Towing Company's budgeted accounts receivable at October 31.

Answer 1

1. Calculation of Towing Company's budgeted accounts receivable at October 31:-
Towing Company
		May	June	July	August	September	October	Total
	Sales on account	$ 257,000	$ 243,000	$ 238,000	$ 269,000	$         251,000	$ 263,000	$ 1,521,000
	32% portion	$   82,240	$    77,760	$    76,160	$    86,080	$           80,320	$    84,160
	40% portion	$ 102,800	$    97,200	$    95,200	$ 107,600	$         100,400	$ 105,200
	16% portion	$   41,120	$    38,880	$    38,080	$    43,040	$           40,160	$    42,080
	8% portion	$   20,560	$    19,440	$    19,040	$    21,520	$           20,080	$    21,040
	4% portion	$   10,280	$      9,720	$      9,520	$    10,760	$           10,040	$    10,520
	32% portion collected in the month of sale	$   82,240	$    77,760	$    76,160	$    86,080	$           80,320	$    84,160
	40% portion collected in the month following sale		$ 102,800	$    97,200	$    95,200	$         107,600	$ 100,400
	16% portion collected in the second month following sale			$    41,120	$    38,880	$           38,080	$    43,040
	8% portion collected in the third month following sale				$    20,560	$           19,440	$    19,040
	4% portion collected in the four months after the month of sale					$           10,280	$      9,720
	Expected Cash Collection	$   82,240	$ 180,560	$ 214,480	$ 240,720	$         255,720	$ 256,360	$ 1,230,080
	Budgetd Accounts Receivable Balance at October 31 (1521000-1230080)							$     290,920
	The above green cell in month columns reflects the uncollected portions. The sum of above is $290920

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