Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000.
Discus Productions would expect to have an accounts receivable balance on June 30 of
A)$37,800.
B)$42,000.
C)$32,000.
D)$28,800.

Question

Quizplus · Accepted Answer

Accounts receivable on June 30 = $37,800.April sales: $120,000 x 10% = $12,000 cash sales$120,000 x 60% = $72,000 collected in April$120,000 x 30% = $36,000 collected in May$120,000 x 10% = $12,000 collected in JuneMay sales: $100,000 x 10% = $10,000 cash sales$100,000 x 60% = $60,000 collected in May$100,000 x 30% = $30,000 collected in JuneJune sales: $80,000 x 10% = $8,000 cash sales$80,000 x 60% = $48,000 collected in June$80,000 x 30% = $24,000 collected in JulyTotal collections in June = $12,000 + $60,000 + $30,000 + $48,000 = $150,000Accounts receivable on June 30 = $60,000 (beginning balance) + $150,000 (collections) - $120,000 (sales) = $37,800

Discus Productions Needs to Know Its Anticipated Cash Inflows for the Next