The Green Retail store is planning to open a new department that only makes credit sales. Its budgeted credit sales for the first year by quarter are as follow: Quarter 1, $10,000; Quarter 2, $11,000; Quarter 3, $12,100; and Quarter 4, $13,310. From the company's market study, the credit department will collect its customers' Accounts Receivable (A/R) balances according to the following pattern: 70% in the quarter of sale, 28% in the following quarter after the sale, and the balance is uncollectible and will be directly written off of Accounts Receivable balance during the 2nd following quarter after the sale. What is the ending Accounts Receivable balance that will be presented in the year-end budgeted balance sheet for the first year?
A) $ 4,235
B) $ 4,655
C) $ 41,755
D) $ 46,410

Question

Quizplus · Accepted Answer

Ending Accounts Receivable Balance = Beginning A/R Balance + Budgeted Total Credit Sales ? Budgeted Total Cash Receipts - Direct Write-Offs of Uncollectible A/R
Ending Accounts Receivable Balance = $0 (first year) + ($10,000 + $11,000 + $12,100 + $13,310) - [(98% × $10,000) + (98% × $11,000) + (98% × $12,100) + (70% × $13,310)] - [(2% × $10,000) + (2% × $11,000) = $0 + $46,410 - $41,755 F1F1F1S1?F1F1F10 $420 = $4,235.

The Green Retail Store Is Planning to Open a New