Question

In: Accounting

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

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