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.

Harrti Corporation has budgeted for the following sales:

July August September October November December

$455,000 $557,000 $663,000 $823,000 $773,000 $733,000

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?

$733,000
$659,700
$891,600
$231,900

Solutions

Expert Solution

On 31 Dec, the Account receivable balance will consist of:
>30% of November sale [as 10% was received in Nov, and 60% in Dec] = $ 773000 x 30% = $ 231,900
>90% of December sale [as 10% was collected in Dec] = $ 733000 x 90% = $ 659,700
Total accounts receivables on Dec 31
= $ 231900 + 659700
= $ 891,600
Correct Answer = Option #3: $ 891,600

ekkarill92 answered 2 years ago

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