Figure 2
Budgeted sales for the second quarter of the current year are as follows:
The company collects 20 percent in the month of sale, 70 percent in the first month following the sale, and 10 percent in the second month following the sale.
-Refer to Figure 2 above. If the accounts receivable balance on April 1 is £125,000, what is the budgeted accounts receivable as of June 30?
A) £159,000
B) £125,000
C) £164,000
D) £144,000

Question

Quizplus · Accepted Answer

The budgeted sales for the second quarter are £795,000 (£475,000 + £320,000). Applying the given collection percentages, we can calculate the budgeted accounts receivable as of June 30:

20% collected in April: £125,000 + (£795,000 x 0.2) = £271,000
70% collected in May: £795,000 x 0.7 = £556,500
10% collected in June: £795,000 x 0.1 = £79,500

Budgeted accounts receivable as of June 30 = £271,000 + £556,500 + £79,500 = £907,000

Therefore, the correct answer is choice C (£164,000).

Figure 2 Budgeted Sales for the Second Quarter of the Current Year