Question

Harrti Corporation has budgeted for the following sales: July $441,000 August $595,000 September $674,000 October $923,000 November $721,000 December $686,000 Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown? $686,000 $617,400 $833,700 $216,300

Answer 1

The amount of receivable to be shown in Balance Sheet would be $8,33,700.

Calculation of receivable is as below:

Month		Collection in same month		Collection in 2nd month			Collection in 3rd month
	Sale	Rate	Collection amount	Rate	Collection Formula	Collection Amount	Rate	Collection Formula	Collection Amount	Total Collection	Amount Receivable
(a)	(b)	(c)	(d) = b X c	(e)	(f) = b X e	(g)	(h)	(i)	(j)	(k) = d + g + j	(l) = b - k
July	441,000	10%	44,100	NA	NA	-	NA	NA	-	44,100	396,900
August	595,000	10%	59,500	60%	(441000 X 60%)	264,600	NA	NA	-	324,100	270,900
September	674,000	10%	67,400	60%	(595000 X 60%)	357,000	30%	(441000 X 30%)	132,300	556,700	117,300
October	923,000	10%	92,300	60%	(674000 X 60%)	404,400	30%	(595000 X 30%)	178,500	675,200	247,800
November	721,000	10%	72,100	60%	(923000 X 60%)	553,800	30%	(674000 X 30%)	202,200	828,100	(107,100)
December	686,000	10%	68,600	60%	(721000 X 60%)	432,600	30%	(923000 X 30%)	276,900	778,100	(92,100)
	4,040,000		404,000			2,012,400			789,900	3,206,300	833,700