Use the information about Billy's Burgers to answer the following question(s):

-Using the percent of sales method,and assuming 20% growth in sales,estimate Billy's Burgers' accounts receivable for 2016.
A)$21.0 million
B)$25.2 million
C)$18.0 million
D)$21.6 million
E)$19.5 million

Question

Use the information about Billy's Burgers to answer the following question(s):
 
-Using the percent of sales method,and assuming 20% growth in sales,estimate Billy's Burgers' accounts receivable for 2016.
A)$21.0 million 
B)$25.2 million 
C)$18.0 million 
D)$21.6 million 
E)$19.5 million

Quizplus · Accepted Answer

The percent of sales method involves estimating future accounts based on a percentage of the projected sales growth. If Billy's Burgers expects a 20% growth in sales and if the current accounts receivable are $21 million (assuming this from the choices given as no base year data is provided), then the projected accounts receivable for 2016 would be $21 million * 1.20 = $25.2 million.

Use the Information About Billy's Burgers to Answer the Following