XRT Limited makes cash and credit sales to customers. The sales budget shows total sales for September, October, November and December 2020 of £210,000, £230,000, £250,000 and £300,000 respectively. 30% of total budgeted sales will be for cash. The other 70% of budgeted sales will be on credit. Of the credit sales, 45% are budgeted to be paid in the month after the month of sale, 30% are budgeted to be paid two months after the month of sale and 25% are budgeted to be paid three months after the month of sale. What is the figure for trade receivables that should appear in XRT Limited's budgeted statement of financial position at 31 December 2020?

Question

Quizplus · Accepted Answer

The trade receivables at 31 December 2020 will include credit sales from October, November, and December that have not yet been paid. Calculate the unpaid credit sales: October (£230,000 * 70% * 30% = £48,300), November (£250,000 * 70% * 75% = £131,250), and December (£300,000 * 70% = £210,000). Add these to get £346,500.

XRT Limited Makes Cash and Credit Sales to Customers