Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?

Question

Harrti Corporation has budgeted for the following sales:  Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown?

Quizplus · Accepted Answer

To calculate the accounts receivable balance at December 31, we need to determine the amount of sales that were made in the respective months.

For December sales, 10% will be collected in December, 60% in January, and 30% in February. 
For November sales, 10% will be collected in November, 60% in December, and 30% in January. 
For October sales, 10% will be collected in October, 60% in November, and 30% in December.

Using this information, we can calculate the total accounts receivable balance as follows:

Accounts Receivable = (December sales * 10%) + (November sales * 60%) + (October sales * 30%)

Accounts Receivable = ($600,000 * 10%) + ($800,000 * 60%) + ($400,000 * 30%)

Accounts Receivable = $60,000 + $480,000 + $120,000

Accounts Receivable = $660,000

Therefore, the answer is (C) $826,500.

Harrti Corporation Has Budgeted for the Following Sales: Sales