Towing Company has budgeted sales for the next six months as follows: Sales for Cash Sales...

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.

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Expert Solution

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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ekkarill92 answered 1 month ago

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