Lakewood Jet Skis has budgeted sales for June and July at $490,000 and $480,000 , respectively. Sales are 75% credit, of which 30% is collected in the month of the sale and 70% is collected in the following month. What is the accounts receivable balance on July 31?

Question

Quizplus · Accepted Answer

First, we need to calculate the amount of credit sales for each month:

June credit sales = $490,000 x 75% = $367,500
July credit sales = $480,000 x 75% = $360,000

Then, we need to calculate the amount of cash collected for each month's credit sales:

June cash collected = $367,500 x 30% = $110,250
July cash collected = ($367,500 x 70%) + ($360,000 x 30%) = $294,000

Now, we can calculate the accounts receivable balance on July 31:

Accounts receivable balance = (June credit sales - June cash collected) + (July credit sales - July cash collected)
= ($367,500 - $110,250) + ($360,000 - $294,000)
= $257,250

Lakewood Jet Skis Has Budgeted Sales for June and July