The Leon Company had the following budgeted sales for the first half of the curr
ID: 2443342 • Letter: T
Question
The Leon Company had the following budgeted sales for the first half of the current year:Jan. Cash $70,000 Credit $340,000
Feb. Cash $50,000 Credit $190,000
Mar. Cash $40,000 Credit $135,000
Apr. Cash $35,000 Credit $120,000
May Cash $45,000 Credit $160,000
Jun. Cash $40,000 Credit $140,000
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:
Collection of sales:
60% in the month of the sale
30% in the month following the sale
10% in the second month following the sale
The accounts receivable balance on Jan. 1 was $70,000, of which $50,000 represented uncollected Dec. sales and $20,000 represented uncollected Nov. sales. What is the budgeted accounts receivable balance on June 1 of the current year?
a. $56,000 b. $64,000 c. $76,000 d. $132,000
please show work and the balance is for June 1st
Explanation / Answer
Accounts Receivables
Jan 1 Jan
Balance $50,000 Cash 20,000
$20,000 $70,000 Cash 50,000x3/4 37,500
Jan 31 Sales $340,000 Cash 340,000x60% 204,000
Feb 28 Sales $190,000 Feb
Mar 31 Sales $135,000 Cash 50,000x1/4 12,500
Apr 30 Sales $120,000 Cash 340,000x30% 102,000
May 31 Sale $160,000 Cash 190,000x60% 114,000
Mar
Cash 340,000x10% 34,000
Cash 190,000x30% 57,000
Cash 135,000x60% 81,000
Apr
Cash 190,000x10% 19,000
Cash 135,000x30% 40,500
Cash 120,000x60% 72,000
May
Cash 135,000x10% 13,500
Cash 120,000x30% 36,000
Cash 160,000x60% 96,000
_______________________________________________________
$1,015,000 $939,000
June 1
Ending Balance $76,000
_______________________________________________________
Alternatively
April Sales $120,000 x 10% $12,000
May Sales $160,000 x 40% $64,000
Total $76,000
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