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A firm has forecasted sales of $3,000 in April, $4,500 in May and $6,500 in June. All sales are...

Question:

A firm has forecasted sales of $3,000 in April, $4,500 in May and $6,500 in June. All sales are on credit. 30% is collected the month of sale and the remainder the following month. What will be balance in accounts receivable at the beginning of July?

Cash Collection

Cash collections are a major source of the company's cash inflows. Sources of cash collections are credit sales from customers, sale of common stock, sale of fixed assets, etc.

Answer and Explanation:

Accounts Receivable balance at the beginning of July is $4,550

June Sales $6,500
Collection next month 70%
Total collection $4,550

Learn more about this topic:

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Cash Collection & Concentration: Definition & Components

from Finance 101: Principles of Finance

Chapter 18 / Lesson 3
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