The Kafusi Company has the following budgeted sales:
The regular pattern of collection of credit sales is 30% in the month of sale, 60% in the month following the month of sale, and the remainder in the second month following the month of sale.
There are no bad debts.
The budgeted accounts receivable balance on May 31 would be:
Account receivables are the current assets of the business which are representing the total debtors of the business. They are the customers to whom the business as provided goods or services in credit and their amount is pending to be paid. Ones the account receivable will pay the cash will be received.
Answer and Explanation:
The correct answer is option c) $242000
Account Receivable on May 31 = 10% of credit sale of April (because only 30% collected in April and 60% in May) + 70% of credit sale of May (because only 30% collected in May)
Account Receivable on May 31 = $320000 * 10% + $300000 * 70% => $32000 + $210000 = $242000
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from Accounting 101: Financial AccountingChapter 7 / Lesson 1