Richards Company has the following budgeted sales for the first half of next year: The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:
Collections on credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
-What is the budgeted accounts receivable balance on May 31?

Question

Richards Company has the following budgeted sales for the first half of next year:  The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:
Collections on credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
-What is the budgeted accounts receivable balance on May 31?

Quizplus · Accepted Answer

Budgeted accounts receivable = (Sales x Credit period) / 365 days= ($120,000 x 60 days) / 365 days= $81,000

Richards Company Has the Following Budgeted Sales for the First