Memphis Company anticipates total sales for April, May, and June of $800,000, $900,000, and $950,000 respectively. Cash sales are normally 25% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are collected in the second month.
- Compute the amount of accounts receivable reported on the company's budgeted balance sheet for June 30.

Question

Quizplus · Accepted Answer

Accounts receivable on June 30 includes 65% of June's credit sales and 5% of May's credit sales. Calculating: June credit sales = $950,000 * 75% = $712,500; 65% of June credit sales = $712,500 * 65% = $463,125. May credit sales = $900,000 * 75% = $675,000; 5% of May credit sales = $675,000 * 5% = $33,750. Total accounts receivable = $463,125 + $33,750 = $496,875.

Memphis Company Anticipates Total Sales for April, May, and June