Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana.Data regarding the store's operations follow: o Sales are budgeted at $380,000 for November,$390,000 for December,and $400,000 for January.
O Collections are expected to be 70% in the month of sale,27% in the month following the sale,and 3% uncollectible.
O The cost of goods sold is 65% of sales.
O The company desires to have an ending merchandise inventory equal to 80% of the following month's cost of goods sold.Payment for merchandise is made in the month following the purchase.
O Other monthly expenses to be paid in cash are $22,000.
O Monthly depreciation is $20,000.
O Ignore taxes. The accounts receivable balance,net of uncollectible accounts,at the end of December would be:
A)$105,300
B)$88,700
C)$117,000
D)$207,900

Question

Carter Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana.Data regarding the store's operations follow: o Sales are budgeted at $380,000 for November,$390,000 for December,and $400,000 for January.
O Collections are expected to be 70% in the month of sale,27% in the month following the sale,and 3% uncollectible.
O The cost of goods sold is 65% of sales.
O The company desires to have an ending merchandise inventory equal to 80% of the following month's cost of goods sold.Payment for merchandise is made in the month following the purchase.
O Other monthly expenses to be paid in cash are $22,000.
O Monthly depreciation is $20,000.
O Ignore taxes.  The accounts receivable balance,net of uncollectible accounts,at the end of December would be:
A)$105,300 
B)$88,700 
C)$117,000 
D)$207,900

Quizplus · Accepted Answer

December accounts receivable balance = 27% of December sales = 27% × $390,000 = $105,300

Carter Lumber Sells Lumber and General Building Supplies to Building