A company has sales revenue of $85,000 in January. It collects $21,250 in January, $22,813 in February, $26,500 in March and $14,437 in April. Using the pattern of credit sales cash receipts, what is the proportion of receivables outstanding at February month-end?

Question

Quizplus · Accepted Answer

To find the proportion of receivables outstanding at the end of February, we need to first calculate the total credit sales for January and February, and the total cash collections through February.

Total credit sales for January and February = $85,000 (given)

Total cash collection through February = $21,250 + $22,813 = $44,063

Therefore, the total receivables outstanding at the end of February would be:

$85,000 - $44,063 = $40,937

To calculate the proportion of receivables outstanding at the end of February, we need to divide the amount outstanding by the total credit sales for January and February:

$40,937 ÷ $85,000 = 0.482

So the answer is C, which represents 48.2%.

A Company Has Sales Revenue of $85,000 in January