Baxter's has the following estimated quarterly sales for next year. The accounts receivable period is 60 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.

Question

Baxter's has the following estimated quarterly sales for next year.  The accounts receivable period is 60 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.

Quizplus · Accepted Answer

For the second quarter, we need to find the expected sales for April, May, and June.

Expected sales for April = $4,800 - ($4,800/3) = $3,200 
Expected sales for May = $5,600 
Expected sales for June = $7,200

Total expected sales for the second quarter = $3,200 + $5,600 + $7,200 = $16,000

Accounts receivable balance at the end of the second quarter would be:

($16,000/2) x (60/30) = $8,000

Therefore, the best choice is C) $8,800, which is closest to $8,000.

Baxter's Has the Following Estimated Quarterly Sales for Next Year