Jeanclaude Corporation produces and sells one product. The budgeted selling price per unit is $105. Budgeted unit sales for July, August, September, and October are 7,400, 7,500, 13,800, and 15,300 units, respectively. All sales are on credit. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month.The budgeted accounts receivable balance at the end of August is closest to:

Question

Quizplus · Accepted Answer

Step 1: Calculate the total sales for each month

July sales = 7,400 × $105 = $777,000
August sales = 7,500 × $105 = $787,500
September sales = 13,800 × $105 = $1,449,000
October sales = 15,300 × $105 = $1,606,500

Step 2: Calculate the collections for each month

July collections = 40% × $777,000 = $310,800
August collections = 40% × $787,500 + 60% × $777,000 = $314,400 + $466,200 = $780,600
September collections = 40% × $1,449,000 + 60% × $787,500 = $579,600 + $472,500 = $1,052,100
October collections = 40% × $1,606,500 + 60% × $1,449,000 = $642,600 + $869,400 = $1,512,000

Step 3: Calculate the accounts receivable balance at the end of August

Accounts receivable balance at the end of July = $777,000 × 60% = $466,200
Accounts receivable balance at the end of August = ($787,500 - $310,800) × 60% + $466,200 = $155,700 + $466,200 = $621,900

Therefore, the closest option to the budgeted accounts receivable balance at the end of August is C) $472,500.

Jeanclaude Corporation Produces and Sells One Product