Question

In: Finance

A company's accounts receivable balance at the end of December is $61,890, of which 19.20% is...

A company's accounts receivable balance at the end of December is $61,890, of which 19.20% is uncollected from December sales. The company's credit sales policy is as follows: 55.10% collected in the month of sale, 34.20% collected in the month immediately after the sale, with the remaining balance collected in the second month after the sale. How much were the total sales in November?

Options:

$432,305

$443,988

$455,672

$467,356

$479,040

Solutions

Expert Solution

Given that,
Accounts receivable ending Balance on December = $61890
Account receivable pertaining to December included in the Ending Balance = $61890*19.20%
                  = $11883
We know that,
Balance amount ($61890 - $11883 = $50007) is pertaining to the uncollected balance of November month.
Remaning percentage of Collection for the Month of November = 100 - 55.10 - 34.2
                   = 10.7%
If total sales of November is "x"
Then,
x * 10.7% = $50007
x = $467356
Therefore 4th option is the correct answer.

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