Question

In: Finance

A company's accounts receivable balance at the end of December is $60,180, of which 18.90% is...

A company's accounts receivable balance at the end of December is $60,180, of which 18.90% is uncollected from December sales. The company's credit sales policy is as follows: 54.80% collected in the month of sale, 34.00% 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?

A) $413,979

B) $424,873

C) $435,768

D) $446,662

E) $457,556

Solutions

Expert Solution

Given that,
Accounts receivable ending Balance on December = $60180
Account receivable pertaining to December included in the Ending Balance = $60180 *18.90%
                  = $11374
We know that,
Balance amount ($60180 - $11374 =$48806 ) is pertaining to the uncollected balance of November month.
Remaning percentage of Collection for the Month of November = 100 - 54.8 - 34
                   = 11.2%
If total sales of November is "x"
Then,
x * 11.2% = $48806
x = $435768
Therefore option C is the correct answer.

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