If accounts receivable are $45,000 and are directly proportional to total sales, the forecast accounts receivable for next year's 5% increase in sales to $125,000 would be:
A) $47,250.
B) $40,500.
C) $49,950.
D) impossible to calculate without last year's credit sales.

Question

Quizplus · Accepted Answer

Since accounts receivable are directly proportional to total sales, a 5% increase in sales would also result in a 5% increase in accounts receivable. The original accounts receivable is $45,000, so a 5% increase is calculated as $45,000 * 0.05 = $2,250. Adding this to the original amount gives $45,000 + $2,250 = $47,250.

If Accounts Receivable Are $45,000 and Are Directly Proportional to Total