SalaRita's sales are 32% cash and 68% credit.Of the credit sales, 40% of credit sales are collected in the month of sale, 45% in the month following the sale, and 15% is collected two months after.Budgeted sales data is as follows: $$\begin{array} { l r }
\text { June } & \$ 200,000 \
\text { July } & 120,000 \
\text { August } & 150,000
\end{array}$$ How much is total 'Accounts Receivable' at the end of August?

Question

SalaRita's sales are 32% cash and 68% credit.Of the credit sales, 40% of credit sales are collected in the month of sale, 45% in the month following the sale, and 15% is collected two months after.Budgeted sales data is as follows: $$\begin{array} { l r } 
\text { June } & \$ 200,000 \
\text { July } & 120,000 \
\text { August } & 150,000
\end{array}$$ How much is total 'Accounts Receivable' at the end of August?

Quizplus · Accepted Answer

To calculate the total Accounts Receivable at the end of August, we need to consider the credit sales that have not yet been collected by the end of August. 1. **June Credit Sales**:   - Total Sales: $200,000   - Credit Sales (68%): $200,000 * 0.68 = $136,000   - Collected in June (40% of Credit Sales): $136,000 * 0.40 = $54,400 (already collected, not in A/R at end of August)   - Collected in July (45% of Credit Sales): $136,000 * 0.45 = $61,200 (already collected, not in A/R at end of August)   - Remaining to be collected in August (15% of Credit Sales): $136,000 * 0.15 = $20,4002. **July Credit Sales**:   - Total Sales: $120,000   - Credit Sales (68%): $120,000 * 0.68 = $81,600   - Collected in July (40% of Credit Sales): $81,600 * 0.40 = $32,640 (already collected, not in A/R at end of August)   - Remaining to be collected in August (45% of Credit Sales): $81,600 * 0.45 = $36,720   - Remaining to be collected after August (15% of Credit Sales): $81,600 * 0.15 = $12,240 (not considered for A/R at end of August)3. **August Credit Sales**:   - Total Sales: $150,000   - Credit Sales (68%): $150,000 * 0.68 = $102,000   - Remaining to be collected after August (100% - 40% collected in August): $102,000 * 0.60 = $61,200 (since we're only considering the end of August, all of August's credit sales are still in A/R)**Total Accounts Receivable at the end of August**:- From June Credit Sales: $20,400- From July Credit Sales: $36,720- From August Credit Sales: $61,200Total A/R = $20,400 + $36,720 + $61,200 = $118,320However, none of the provided options match the calculated total of $118,320. Given the options, it seems there might have been a mistake in the calculation or interpretation of the options. Based on the methodology and the options provided, let's correct the approach:The correct calculation should focus on the credit sales that are not yet collected by the end of August, which includes:- 15% of June's credit sales.- 45% + 15% of July's credit sales (since only 40% is collected in the month of sale, and we're at the end of August).- All of August's credit sales are considered as receivable since none of it would be collected by the end of August based on the given collection pattern.Given this discrepancy and re-evaluating the provided options, it seems there might have been an error in the initial calculation or in the interpretation of the question as it relates to the options provided. The correct answer should be based on the logic of calculating outstanding receivables from credit sales not yet collected by the end of August, but without the correct figures aligning with the options, there's a misunderstanding in the calculation process. Revisiting the calculation with the correct understanding and based on the options provided, the correct answer should reflect the sum of uncollected credit sales by the end of August, but without the exact figures aligning to the provided options, the explanation aimed to demonstrate the process of calculating Accounts Receivable from credit sales over the given months. The correct answer choice should be selected based on the accurate calculation of these figures.

SalaRita's Sales Are 32% Cash and 68% Credit June $200,000 July 120,000 August 150,000\begin{array} { l r } \text { June } & \$ 200,000 \\\text { July } & 120,000 \\\text { August } & 150,000\end{array} June July August ​$200,000120,000150,000​

SalaRita's Sales Are 32% Cash and 68% Credit $\begin{array} { l r } \text { June } & \$ 200,000 \\\text { July } & 120,000 \\\text { August } & 150,000\end{array}$