Trumbull Corporation budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be:
A)$169,800
B)$147,960
C)$197,880
D)$194,760

Question

Quizplus · Accepted Answer

Cash receipts from accounts receivable for September would be $169,800. This is calculated as follows:Sales on account in August: $211,00060% collected in September: $126,600Sales on account in September: $198,00060% collected in October: $118,800Total cash receipts from accounts receivable in September: $169,800

Trumbull Corporation Budgeted Sales on Account of $120,000 for July