Compton Company expects the following total sales: The company expects 60% of its sales to be credit sales and 40% for cash. Credit sales are collected as follows: 30% in the month of sale, 70% in the month following the sale. The budgeted accounts receivable balance on May 31 is:

Question

Compton Company expects the following total sales:  The company expects 60% of its sales to be credit sales and 40% for cash. Credit sales are collected as follows: 30% in the month of sale, 70% in the month following the sale. The budgeted accounts receivable balance on May 31 is:

Quizplus · Accepted Answer

Budgeted accounts receivable balance on May 31 = May sales × Percent credit sales × Percent collected in month following the month of sale
Budgeted accounts receivable balance on May 31 = $30,000 × 60% × 70% = $12,600

Compton Company Expects the Following Total Sales: the Company